Calculate net present value

[sleeplessinnewjersey]

I need to use the Excel (2002) net present value function. I looked in Help
and was told to copy a table therein to a new worksheet. I did so. However,
I found nothing to guide me in using it. I need to calculate the net present
value of an investment that will produce annual savings over 5 and 10 year
periods. I need to specify the discount rate. Can someone please give me
step-by-step directions?

[Sean Timmons]

The best thing for you to do is click on the fx next to your address bar.
Pick NPV and follow the prompts.

First, you enter the rate. I assume you'll want this to be a value in
another cell, so just click on that cell.

Next, just enter the payments/income for up to 29 periods. Again, you can
reference other cells to populate these values.

HTH!

[joeu2004]

On Jan 9, 10:19 am, sleeplessinnewjersey

<sleeplessinnewjer...@discussions.microsoft.com> wrote:
> I need to use the Excel (2002) net present value function.
> I looked in Help and was told to copy a table therein to a
> new worksheet.  I did so.  However, I found nothing to
> guide me in using it.

The table is just an example. It has little to do with individual
usage of NPV. You plug in whatever numbers and however many numbers
that apply to your situation.

The important thing to note about the Excel NPV function is:
typically, the first cash flow should not be included in the NPV
parameter list because, typically, CF0 occurs at time 0. Also note
that inflows and outflows have opposite signs; typically, investments
and costs are negative.

> I need to calculate the net present value of an investment
> that will produce annual savings over 5 and 10 year periods.
> I need to specify the discount rate.  Can someone please
> give me step-by-step directions?

The discount rate is an "arbitrary" number that only you can decide.
Or perhaps it is given to you in the problem specification. NPV might
not even be the correct function for you to use.

I suggest that you post the description of the problem you are really
trying to solve. "Produce annual savings" is ambiguous; be more
specific. For example:

"I want to determine what my initial investment must be in order to
permit to withdraw an average of <this amount> (or according to <this
schedule>) over 5-year and 10-year periods. The investment is
expected to have <this%> average annual return."

(FYI, for __that__ problem, you do not even need NPV if the withdrawal
amount and is the same for each period.)