Microsoft Office Tutorials and References

In Depth Information

**NPV**

attain after the last payment is zero (the loan is paid off). And the payment type is zero (at the

end of the period). The number of periods (
NPER
) to payoff the loan would equal 23. Note that

not specifying a value for
FV
will result in a negative number of periods.

The interest rate per period.

RATE

The payment made per period and cannot change over the life of the loan or

annuity (typically is the principal and interest).

PMT

The present value that a series of payments is worth right now. If omitted,

Excel assumes zero.

PV

The future value or cash balance you want to attain upon the last payment.

FV

The payment timing—when the payments are due.

TYPE

Figure 6.24

Use the
NPER
function

to return the total

number of periods for

an investment. This is

based on periodic

constant payment and

a constant interest rate.

A

The function

built with cell

referencing

NPV
NPV
calculates the net present value of an investment with the discount rate and several future

payments and income.

=NPV(rate,value1,value2,...)

The
NPV
function provides the net present value with the future incomes based on the current

discount rate. For example, let’s say you invested $35,000 in a business and you expect to receive

over the next 4 years a return of $7,000, $13,000, $15,000, and $18,000. With an annual discount

rate of 9%, the net present value of the investment would be $6,145, as shown in Figure 6.25.

The discount rate over the entire period.

RATE

1-29 arguments representing the payments and income.

VALUE

NPV
can be calculated as: