NPV Help

Hello, I am trying to solve a problem regarding NPV and discount rates. No matter what I do the NPV does not display the correct amount. I have attached a file, showing the setup of my formula and what the numbers should display. I don't understand why I can't get these values. Any help would be appreciated. Thanks.

NPV needs a series of values to calculate, not just a single 1. see the attached link for an example, hope this helps...

http://excel-formulas.blogspot.com/2...v-formula.html

Originally Posted by xodis

Hello, I am trying to solve a problem regarding NPV and discount rates. No matter what I do the NPV does not display the correct amount. I have attached a file, showing the setup of my formula and what the numbers should display. I don't understand why I can't get these values. Any help would be appreciated. Thanks.

You seem to have different rates to discount each of the cash flows. NPV function is Excel calculates net present value of an ordinary annuity that makes end of period payments using a single discount rates

I looked at the expected results that you put in to your Worksheet in cells F2 and F3. The two numbers make no sense to me

Here is what you can do in Excel to find the net present value for your annuity due that uses different discount rates

We will use the PV function to find present value of each of the cash flows at it's respective discount rate and for the particular time period t

Since the first outgoing cash flow occurs at time period 0, thus we can't use PV to find it's present value at time period 0 because Excel will report a present value of 0

We will simply use the -3,800,000 as the present value of cash flow at time period 0

From there, we will find the present value of cash flow at time period 1 using the following function

=PV(C3,A3,0,-B3,0)

C3 has the rate of 2%
A3 has the time period t = 1
PMT is 0
FV is -170,000
TYPE is 0

We will repeat the above calculation for all of the cash flows

And finally net present value will be the sum of individual discounted cash flows in amount of $-500,705.63

You could also try this online NPV calculator to find the net present value of cash flows when you have different discount rates

Another option is to use TADXL add-in for finance that provides new functions and extends existing financial functions in Excel

See the attached Excel file to find how I did the NPV calculation using PV function

NPV.xlsx