Finance
Find the value of future cash today (NPV)
=NPV(B1,B3:B5)+B2How it works in Excel
- B1 is the discount rate.
- B3:B5 are the cash flows in future years.
- B2 is the money paid today, entered as a negative number.
- NPV treats the first value as one period away, so today's cost is added outside the function.
- Putting the cost inside NPV is a common mistake, because it gets discounted when it should not be.
- For uneven dates, use XNPV.
The idea in general
A dollar next year is worth less than a dollar today. This turns future money into today's money, so you can see if a project is worth it.
What I assumed
- The rate is in B1, today's cost is in B2 as a negative, and future cash flows are in B3:B5.
Check the result on your own data before relying on it.