NPV Function in Excel: Net Present Value of Future Cash Flows

NPV Function in Excel: Net Present Value of Future Cash Flows featured illustration

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⏱ 2 min readUpdated 28 September 2026

FinancialLevel: ExpertAvailable in: Excel 2007+

In this article
  1. Syntax
  2. Examples
  3. Example 1
  4. Common errors and fixes
  5. NPV in practice
  6. Where you will use it
  7. Worked example
  8. Mistakes people make
  9. Related functions
  10. Continue learning

NPV discounts future cash flows to today’s value at a given rate — the core of investment appraisal.

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Syntax

=NPV(rate, value1, [value2], ...)
Argument What it means
rate Discount rate per period.
value1… Cash flows at the END of periods 1, 2, 3…

Examples

Example 1

=NPV(10%, C3:C7) + C2

Project NPV: C2 is the initial investment at time 0 (negative), added outside NPV.

Common errors and fixes

You see Why, and the fix
NPV too low/high Including the time-0 investment inside NPV discounts it by one period. Add it separately.

NPV in practice

Where you will use it

  • Value today of future cash flows
  • Project appraisal
  • Compare investments

Worked example

RateFormulaResult
0.08=TEXT(NPV(A2,30000,35000,40000,45000)-100000,"#,##0")22,614
0.12=TEXT(NPV(A3,30000,35000,40000,45000)-100000,"#,##0")11,757
0.15=TEXT(NPV(A4,30000,35000,40000,45000)-100000,"#,##0")4,582

Results calculated in Excel.

Mistakes people make

MistakeWhat to do instead
Including the year-0 flowNPV assumes all flows are a period away; subtract the initial investment outside
Uneven datesUse XNPV

XNPV · IRR · XIRR

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📎 Practice files for this article

  • 📗
    Practice workbook: Financial: EMI, SIP, NPV, IRR, depreciation23 tasks on realistic sales data — type your formula, the Check column turns green when it is right. Answers sheet included.
    ⬇ XLSX · 35 KB

Free to use for learning. Files with macros (.bas) are plain text — import them with Alt+F11 → File → Import File, and always test on a copy.

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