# NPV Formula in Excel

## About the NPV formula in Excel

The NPV formula in Excel, is a way of calculating the Net Present Value (“NPV”) of a series of cash flows based on a specified discount rate. Visit this page to visualize the process.

The formula works by first selecting a discount rate, and then selecting a continuous series of cash flows.

The NPV function can be very useful for financial analysis and financial modeling when determining the value of an investment (a company, a project, a cost saving initiative, etc.).

In your financial model, you can follow the stops below to properly link up the NPV function.

### How to link the NPV formula

=NPV(discount rate, series of cash flow)

(See screenshots below)

Example of the NPV function

Step 1: Set a discount rate in a cell.

Step 2: Establish a series of cash flows (must be in consecutive cells).

Step 3: Type “=NPV(“  and select the discount rate “,” then select the cash flow cells and “)”.

Congratulations, you have now calculated the NPV in Excel!

### What is the math behind the NPV formula?

Here is the mathematical formula for calculating the present value of an individual cash flow.

Where,

PV = Present Value
F = Future payment (cash flow)
r = Discount rate
n = the number of periods in the future the cash flow is

PV = F / [ (1 + r)^n ]