net present valuation



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In the video of npv the total cash flows calculated with 10% discount rate and the npv was 699, whereas when we calculate the same using excel formula the npv comes with a different value.. sir pls explain.

1 Answer(s)


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Hi Chandan,
the reason for this is because 10,000 is initial investment in the beginning of year. You need to understand the working of excel formula for this.

Desired result can be obtained by putting "=NPV(0.1,4000,4000,5000) -10000" in excel.

to understand the working of NPV excel formula goto to below mentioned link and see example 2 there.
http://office.microsoft.com/en-in/excel-help/npv-function-HP010342728.aspx

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