Microsoft Office Tutorials and References
In Depth Information
Chapter 12: Discounting and Depreciation Formulas
Figure 12-8: Calculating the NPV using quarterly cash flows.
For an illustration of the difference that can result from different frequencies, see Figure 12-9. It
shows the same data, but this time, the calculations are based on the assumption that the rent of
$48,000 per annum is paid annually in arrears. Still discounting at 7% per annum effective, you
get an NPV of $160,635.26. The formula in cell D32 is
Figure 12-9: Calculating the NPV by annualizing quarterly cash flows.
Using the NPV function to calculate accumulated amounts
This section presents two examples that use the NPV function to calculate future values or
accumulations. These examples take advantage of the fact that
FV = PV * (1 + Rate)^nper
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