![]() ![]() ![]() Net present value is defined as the present value of the expected future cash flows less the initial cost of the investment.the NPV function in spreadsheets doesn't really calculate NPV. Mayes, author of Financial Analysis with Microsoft Excel, says on his website : Although NPV carries the idea of "net", as in the present value of future cash flows less initial cost, NPV is really just the present value of uneven cash flows.Īs Timothy R. NPV in Excel is a bit tricky, because of how the function is implemented. The discount rate is the rate for one period, assumed to be annual. NPV calculates the net present value (NPV) of an investment using a discount rate and a series of future cash flows.
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