Provided by the International Finance Corporation
The Net Present Value (NPV) represents the difference between the present value of cash inflows and the present value of cash outflows. It is used in budgeting to analyze the profitability of an investment or project. If the NPV of a prospective project is positive, it should be accepted. However, if NPV is negative, the project should probably be rejected because cash flows will also be negative.
In the Excel file below, enter an interest (discount) rate, the initial investment (negative value), the expected future net cash flows (negative values for payments and positive values for income), and the investment period (max 10 years). The tool also allows for comparison of different investment options by entering the corresponding expected cash flow. The tool will automatically calculate the NPV that you can use to make your investment decisions.
You may adapt the tool to reflect your business needs, type of clientele, products and services you offer.
Attachments:
Net Present Value Table for Calculating the Present Value of an Investment
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