This document provides instructions for using the NPV and IRR functions in Excel to analyze an investment. It describes the data in columns B and C which include values and descriptions. The discount rate is in cell F2. It shows how to use the NPV function in cell F4 to calculate the net present value of the investment by using the values in cells B4:B10 and discount rate in F2. It also demonstrates calculating the internal rate of return in cell F3 using the IRR function on the range B3:B10.
This document provides instructions for using the NPV and IRR functions in Excel to analyze an investment. It describes the data in columns B and C which include values and descriptions. The discount rate is in cell F2. It shows how to use the NPV function in cell F4 to calculate the net present value of the investment by using the values in cells B4:B10 and discount rate in F2. It also demonstrates calculating the internal rate of return in cell F3 using the IRR function on the range B3:B10.
This document provides instructions for using the NPV and IRR functions in Excel to analyze an investment. It describes the data in columns B and C which include values and descriptions. The discount rate is in cell F2. It shows how to use the NPV function in cell F4 to calculate the net present value of the investment by using the values in cells B4:B10 and discount rate in F2. It also demonstrates calculating the internal rate of return in cell F3 using the IRR function on the range B3:B10.
This document provides instructions for using the NPV and IRR functions in Excel to analyze an investment. It describes the data in columns B and C which include values and descriptions. The discount rate is in cell F2. It shows how to use the NPV function in cell F4 to calculate the net present value of the investment by using the values in cells B4:B10 and discount rate in F2. It also demonstrates calculating the internal rate of return in cell F3 using the IRR function on the range B3:B10.
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Setting up Our Data for the NPV and IRR Functions
Let’s look at the structure of the data we will use. In column B (“Amount”), we have values including initial investment and yearly incomes. In column C (“Description”) we have a description of every amount. The discount rate is in F2. In the cell F3, we want to get the IRR, while in F4 NPV.
Figure 2. Data that we will use in the NPV and IRR example
Get an NPV of Values Using the NPV Function
In our example, we want to get the NPV of the values in the range B3:B10. The result will be in the cell F4.
The formula looks like:
=NPV(F2, B4:B10) + B3
The parameter rate is the cell F2, while the values are in the range B4:B10. We omit the first value from B3, as it is negative and add it to the function result.
To apply the NPV function, we need to follow these steps:
