How do you calaulate NPV

NPV = $60 + $60
__________ - $100
(1+r) (1 +r)2

investment cost $100
expected result in revenues of $60 in 2 years
r = 0.10

Quote:

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Originally Posted by Freda

How do you calaulate NPV

NPV = $60 + $60
__________ - $100
(1+r) (1 +r)2

investment cost $100
expected result in revenues of $60 in 2 years
r = 0.10

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Hello,

NPV can also be calculated using the popular "MS Excel" software or you can enter calculations manually via an appropriate NVP calculator. There are also Net Present Value Tables for calculating the NVP as well.

Using Excel's NPV function you can fill in the cost of capital and annual cash flows, and Excel does the rest---these days :)

The general perpetuity formula is: (when the investment period is unknown/infinite)

NPV = Cash Flow / rate

You can also calculate the NPV of an investment by using a discount rate (specified rate of return aka similar to interest) and a series of future payments (negative values) and income (positive values). NPV is based on "future cashflow" estimates and payments over a specified period.

Here's a website for using an online NVP calculator.
Net present value Calculator

Here's a website for using Excel spreadsheets and NVP.
Calculating Net Present Value and IRR Using Excel

I must say with the problem you have indicated above---it is likely that it will end up on the minus/ or negative side. ;)

Hope this helps.
Tomy M. Hall, MS

The NPV is nothing else but a sum of all the cashflows of a project discounted to the present time. If you want to calculate one, you can use this webpage:

NPV Calculator