How it works.
NPV computes the net present value of an investment by discounting future cash flows at a periodic discount rate.
Formula syntax.
Standard Excel Notation=NPV(rate, value1, [value2], ...)[like_this] are optional; all other arguments are required.Formula arguments.
Every parameter accepted by the NPV function is detailed below.
The discount rate per period.
Example value:0.10Range of future cash flows starting at Year 1.
Example value:B2:B5Simple example.
Step-by-Step ScenarioCapital Budgeting - Net Present Value
Evaluate future discounted returns from capital equipment.
| Year | Cash Inflow | Net Present Value |
|---|---|---|
| Year 1 | 1000 | — |
| Year 2 | 2000 | — |
| Year 3 | 3000 | — |
=NPV(0.10, B2:B4)Evaluates NPV over the sample table cells, placing the verified output in cell C2.
Formula generator.
Full Generator WizardCustomize the argument fields below to generate a tailored NPV formula ready to paste directly into your worksheet.
=NPV()Expected result behavior.
Returns number 4921.11 based on sample evaluation criteria and active cell references.
Best Practices
- Initial Year 0 investment must be added outside the formula: =NPV(rate, Year1:YearN) + Year0.
Common Mistakes
- Do not include the initial Year 0 cash outflow inside the NPV function range.
Platform & version compatibility.
Verified platform compatibility matrix based on actual spreadsheet calculation engine specifications.
Core standard function supported across all modern and legacy Microsoft Excel versions (365, 2021, 2019, 2016, 2013, 2010), as well as Excel for the Web and Mac.
100% compatible with Google Sheets. Uses identical argument order, data types, and standard calculation logic.
Frequently asked questions.
Technical Q&ACan I use NPV across different worksheets in Excel?↓
Yes. You can reference cells located on other sheets by including the sheet name followed by an exclamation mark, for example: =NPV(Sheet2!A2:A10). If the sheet name contains spaces, enclose it in single quotes: ='Q1 Report'!A2:A10.
What is the most common reason for errors in NPV?↓
Do not include the initial Year 0 cash outflow inside the NPV function range.
Does NPV work identically in Google Sheets?↓
Yes, NPV is supported in both Microsoft Excel and Google Sheets with standard evaluation behavior.