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:
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