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Net Present Value (NPV) – Basics, Formula, Calculations in Excel (Step by Step) [Video]

Net Present Value (NPV) – Basics, Formula, Calculations in Excel (Step by Step)

In this video, we will talk about the Net Present Value (NPV), its meaning, formulas, calculations, and its uses.

00:00 – Introduction
01:05 – Future Value Concept
05:11 – Present Value Concept
08:47 – NPV – Net Present Value of Project
12:31 – NPV Formula
13:50 – NPV Calculation in Excel
16:14 – NPV Graph Profile
22:36 – NPV Limitation

What is NPV?
Net Present Value is primarily used to assess a project’s profitability and is calculated as the difference between the present value of cash inflows and the present value of cash outflows over the project’s time period.

Formula for NPV = NPVt=1 to T = ∑Xt / [(1+R) t – X0]

Two parts of NPV:
1. Cash Inflows from Investment
2. Cost of Investments in the project

Uses of NPV:
1. It compares both cash inflow and outflow
2. It offers a conclusive decision
3. Very easy to calculate

#wallstreetmojo, #NPV, #netpresentvalue

For more details, you can refer to our article at –https://www.wallstreetmojo.com/net-present-value-npv-formula/

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