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This is an article that shows you how to calculate the Net Present Value (NPV) of an investment using Microsoft Excel. You can do this using Excel on Windows and Mac computers.
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Make sure you have information on your investment available. To calculate the NPV, you need to know the annual discount rate (such as 1%), the initial investment, and the return for at least one year. [1] X Research Source
- It is better if you have an investment return of 3 years or more, but this information is not required.
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Open Microsoft Excel. This is a program with a green box icon with a white “X”.
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Click Blank workbook . You’ll see this option in the upper-left corner of the Excel window.
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Enter the investment’s discount rate. Select a cell (such as A2 ), and then enter the decimal equivalent of the investment’s annual discount rate.
- For example, if the discount rate was 1%, you would enter 0.01 here.
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Enter the initial investment. You click on an empty cell (such as A3 ) and enter the initial amount that was used to invest.
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Enter the profit for each year. Click another blank cell (such as A4 ), then enter the profit for the first year and enter the additional profit you will make in the following years.
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Select a cell. Click the cell that you want to use to calculate the NPV.
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Enter the formula to calculate the NPV. You would enter =NPV() here. The information of the investment is entered in parentheses.
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Add value to the NPV formula. Inside the parentheses, you need to enter the number of the cell containing the discount rate, the investment, and a minimum amount of profit.
- For example, if cell A2 is the discount rate, cell A3 is the investment, and cell A4 is profit, your formula would be =NPV(A2,A3,A4) .
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Press ↵ Enter . This is an operation that tells Excel to calculate the NPV and display the result in the selected cell.
- If the NPV shows a red number, the investment has a negative value.
Advice
- You can use NPV to predict future investments, if you are confident with current returns.
Warning
- If there is no profit for at least a year, you cannot calculate the NPV.
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This article is co-authored by a team of editors and trained researchers who confirm the accuracy and completeness of the article.
The wikiHow Content Management team carefully monitors the work of editors to ensure that every article is up to a high standard of quality.
This article has been viewed 10,013 times.
This article shows you how to calculate the Net Present Value (NPV) of an investment using Microsoft Excel. You can do this using Excel on Windows and Mac computers.
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