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NPV using a Microsoft Excel formula

NPV using a Microsoft Excel formula - Microsoft Excel Tutorial

From the course: Investment Evaluation

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NPV using a Microsoft Excel formula

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- [Instructor] Let's see how we can quickly solve for NPV in Excel. I'm in the 03_06_Begin exercise file. And as you can see, I've set up two columns, one for the term and one for net cash flows. You'll also see that I have a cell for discount rate and another one for net present value. Let's imagine the situation in which our business owner friend Kevin is investing $5000 for a piece of equipment that he expects to net $1000 a year for seven years. The discount rate is 7% so in cell E4, I'll type in .07. And again I'm solving for NPV. So let's take a look at this table here. My net cash flows for the first year are actually gonna be negative 5000 and why is that? Well because he invested $5000, that was a cash outflow. And he expect $1000 a year in net cash inflow from years one to seven, so that's simply gonna be a positive $1000 year over year. I'm gonna fill that in, now I don't like the way this looks so I am going to format it, okay. Now again, I'm trying to find net present…

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