Net Present Value

R

ronma

New Member
Joined
May 14, 2010
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I'm working on a time value of money problem and I'm unsure of my math. If I show cash flows from an investment how does Excel know if it's 5 months or 5 years? The NPV for 5 months seems wrong in my calculation.

<TABLE style="WIDTH: 220pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width=293 border=0><COLGROUP><COL style="WIDTH: 62pt; mso-width-source: userset; mso-width-alt: 3035" width=83><COL style="WIDTH: 110pt; mso-width-source: userset; mso-width-alt: 5339" width=146><COL style="WIDTH: 48pt" width=64><TBODY><TR style="HEIGHT: 12.75pt" height=17><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; WIDTH: 62pt; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" width=83 height=17></TD><TD class=xl69 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; WIDTH: 158pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent; mso-ignore: colspan" width=210 colSpan=2>Projected Cash flows from Google</TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl69 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" height=17>Investment</TD><TD class=xl66 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"> $ (75,000.00)</TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl68 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" height=17>January</TD><TD class=xl66 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"> $ 83,362.50 </TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl68 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" height=17>February</TD><TD class=xl66 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"> $ 83,362.50 </TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl68 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" height=17>March</TD><TD class=xl66 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"> $ 83,362.50 </TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl68 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" height=17>April</TD><TD class=xl66 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"> $ 83,362.50 </TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD class=xl68 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" height=17>May</TD><TD class=xl66 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"> $ 83,362.50 </TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" height=17></TD><TD class=xl66 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" height=17></TD><TD class=xl66 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" height=17></TD><TD class=xl66 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" height=17></TD><TD class=xl66 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" height=17></TD><TD class=xl69 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">Net Present Value</TD><TD class=xl69 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" height=17></TD><TD class=xl67 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"> $ 340,772.49 </TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" height=17></TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" height=17></TD><TD class=xl69 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">Rate of Return</TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="HEIGHT: 12.75pt" height=17><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 12.75pt; BACKGROUND-COLOR: transparent" height=17></TD><TD class=xl70 style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" align=right>22.01%</TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR></TBODY></TABLE>
 

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What formula are you using?

Excel won't 'know' if it's 5 months or 5 years, you would tell it what period you wanted to use.
 
Upvote 0
=NPV(D4/12, C9:C17)+C8

Just using NPV.. so where do I tell Excell that it's in months and not years?

D4 annotates the discount rate.
 
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