How to use the NPV function in Google Sheets?
The NPV function is used in Google Sheets to calculate the net present value of a series of cash flows. This function takes a range of cash flows and discounts them to their present value based on a specified discount rate. The formula for the NPV function is:
=NPV(rate, value1, [value2, ...])where:
- rate: the discount rate to be applied to the cash flows
- value1: the first cash flow in the range
- value2, ...: additional cash flows in the range
It is important to note that the first cash flow must occur at the end of the first period. If the first cash flow occurs at the beginning of the first period, a dummy cash flow of 0 should be added to the beginning of the range.
To use the NPV function in Google Sheets, first select the cell where you want to display the result. Then, type the formula into the cell, using the appropriate arguments. For example, to calculate the net present value of a series of cash flows with a discount rate of 10%, the formula would be:
=NPV(0.1, A1:A5)where A1:A5 is the range of cash flows to be discounted.
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