The Excel **NPV** function is a finance function that calculates the net present value (NPV) of a series of cash flows based on a specified discount rate. In this guide, we’re going to show you how to use the Excel **NPV** function and also go over some tips and error handling methods.

# Supported versions

- All Excel versions

# Excel NPV Function Syntax

NPV(rate, value1,[value2],…)

# Arguments

rate |
Discount rate over one period. |

value1 |
The first value of cash flows. A range can be used to refer 1 to 254 arguments representing the payments and income. |

[value2],… |
Optional. The second value of cash flows. This can be omitted by using a range for value1. |

Examples

We are going to be using named ranges in our examples to make the formulas easier to read, but this is not required.

## Example 1

=NPV(rate,cash_flow)

**NPV**function is defined as

**where**

*NPV = F / [ ( 1 + I ) ^ n ]***,**

*F*

*I**,*and

**stand for**

*n**future payment (cash flow)*,

*rate,*and

*number of periods*respectively.

## Example 2

=NPV(rate2,cash_flow2)+initial2

**NPV**function can be used with an initial cost of investment. Although, NPV refers to "net" present value, the

**NPV**calculation is based on present value of uneven future cash flows. If there is an initial investment, the investment value must be added to the NPV result, and excluded from the function arguments.

# Tips

- The Excel
**NPV**function uses the order of*value1*,*value2*,*...*when calculating the outcome. Therefore, you must pay attention to the order that you enter the payment and income values. - Arguments that are empty cells, logical values, text representations of numbers, error values, or a text string that cannot be translated into numbers will be ignored.
- If an argument is an array or reference, only numbers in that array or reference will be counted. Empty cells, logical values, text, or error values in the array or reference are omitted.
- If you have the exact dates of cash flows, and need to be very precise with your calculations, use
**XNPV**instead of the NPV function.