Returns the net present value of a series of future receipts at a fixed periodic interest rate.
It is assumed that the receipts are at equal intervals and take place at the end of each period.
Syntax:
NPV(interest:Number, range)
where:
interest | is the interest rate; |
range | is the range of cells containing the amounts of the receipts. |
Formula:
NPV = ∑i=n ( xi ÷ (1 + interest)i )
where:
n | is the number of cash flows (i.e. the number of elements in the range); |
xi | is the amount received at the end of the i-th period. |
Example:
Cells B10:B14
each contain 120
(pounds).
Given an interest rate of 10%, the formula
NPV(0.10, B10:B14)
returns the number 500.38
(pounds), the present value of the future receipts.