From the course: Investment Evaluation

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Solution 4: Calculate NPV using Microsoft Excel

Solution 4: Calculate NPV using Microsoft Excel - Microsoft Excel Tutorial

From the course: Investment Evaluation

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Solution 4: Calculate NPV using Microsoft Excel

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- [Instructor] Alright, welcome to the fourth solution video in this course. And if you want the fully worked out file, you can find it in 03_08_Solution4. So let's take a look at what's going on here. You've got a project overhead of $10,000 and that immediately means that a term equals zero, we have a cash outflow of $10,000. Next you have a discount rate of 11% so in cell E2, I'll type in .11 to represent the discount rate in decimal form. My project duration is 10 years, that looks good. And I have annual net return, I have annual net cash inflow of $1700 so I can go ahead and fill that in in column B. And I'll double click on the right hand corner there. Now, I'm looking for net present value and to do that I can use the Excel formula. I'll type an equals sign, type an NPV, open up the parenthesis and click on cell E2 which is the discount rate. Comma, now the next argument I'll pass is the cash inflows. Remember the NPV formula does not account for the cash outflow. So that's B3…

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