How to Calculate Net Present Value (NPV) in Excel

Net Present Value (NPV) is a useful investment analysis technique which helps the management greatly in making informed decisions. Manual  exercise of calculating NPV takes a time but thanks to Microsoft Excel that it can be done within a minutes. 

Things to require

In order to calculate NPV using Excel formula is easy. For this, we need things as follows:

  1. discount rate
  2. cash flows year 1
  3. cash flow year 2
  4. cash flow year 3 and so on
  5. initial investment amount


= NPV(discount rate, cash flow year 1, cash flow year 2, cash flow year 3, ...) + initial investment


ABC CFO is evaluating the project with the following cash flows:










 Cash Flows








 Discount rate







We have used the following formula to calculate the NPV:


C7 contains discount rate, while cell D5 to H5 contain annual cash flows. C5 contains initial investment at the time of starting the project.


Financial Ratios Accounting Cycle Accounting Principles Financial Accounting Basics Financial Statements Reporting Bad Debts Current Assets Long-term Assets Voucher System Partnership Depreciation Work Sheet - 10 Column Work Sheet Difference Between Reserve and Fund Accounting for Leases Capital reduction and reconstruction Absorption of Company Amalgamation Accounting for Installment Sales Basis of Recording Profit and Loss Branch Accounting Construction Contracts Revenue Recognition Accounting for Groups Financial Analysis Events After the Balance Sheet Date Deferred Tax Cost Accounting Activity Based Costing (ABC) Throughput Accounting Relevant Cost Break Even Analysis Standard Costing Inventory Management Payroll Accounting Royalty Accounting Statistics Master Budget Salary Income Microsoft Excel Tutorial How to Count Number of Records between Two Dates How to sum values in excel based on a criteria Finding the first login and last logout time of employees How to Print Salary Slips Using VLookup Formula in Excel How to Calculate Net Present Value (NPV) in Excel Income tax calculation excel sheet for salaried individuals How to Calculate Pay Back Period in Excel How to Calculate Declining Balance in Excel Using Formula How to Calculate Double Declining Balance in Excel How to Calculate Number of Payments on A Loan In Excel Using NPER Count the Number of Excel Records That Fall Between Two Dates How to Count Cells between Two Numbers in Excel How to Prepare Exam Result in Excel 3D Sum Multiple Worksheets How to Count Specific Text in Excel Other Topics Share or Stock Valuation Model Financial Management Topics Kinds of Endorsement Letter of Credit, Kinds and Its Advantages/ Utilities Modern Functions of a Commercial Banks Difference Between Secured And Unsecured Loan Excel conditional formatting red if negative green if positive How to Remove Extra Spaces in Excel