Net Present Value


July 31st, 2006 by admin admin

One categories of formulas that is available in Excel is for calculating financial information. It includes Present Value, Future Value and most important of all, Net Present Value. Net Present Value is used to evaluate the viability of an investment. If the Net Present Value (NPV) is positive, it means that it is worthwhile to take up that investments. It also takes into account the risk appetite of the investor. This is achieved through the use of the discount rate. An investment can be pretty complicated to evaluate as it is likely to involve cash flows for a number of years. Also, this may include cash out flow during the terms of the investment other than that in the initial stage. To calculate NPV, we usually have to draw a time line to get a clearer picture. And Excel is one good tool that could help you draw this time line. What’s more, there are formulas that are provided By Excel that will help you calculate the net present value of this investment. To find out how, click here to find out more.

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