Homework SourseHow do you calculate Profit Present Value in excelSolutionin
How do you calculate Profit Present Value in excel?
Solution
in Simple method we can calculate as below,
| Example for calculation of NPV | ||||||
| Amount invested = | $ 1,00,000.00 | |||||
| Cash inflow is | Year 1 = | $ 40,000.00 | ||||
| Year 2 = | $ 50,500.00 | |||||
| Year 3 = | $ 75,500.00 | |||||
| PVF = | 10% | |||||
| Period | Particulars | Net Inflow/ Outflow (A) | PVF @ 10% (B) | Present Value (A X B) | ||
| 0 | Outflow | $ -1,00,000.00 | $ 1.00 | $ -1,00,000.00 | ||
| 1 | Inflow | $ 40,000.00 | $ 0.91 | $ 36,363.64 | ||
| 2 | Inflow | $ 50,500.00 | $ 0.83 | $ 41,735.54 | ||
| 3 | Inflow | $ 75,500.00 | $ 0.75 | $ 56,724.27 | ||
| Net Present Value | $ 34,823.44 | |||||
| In this method simple we have to put the data in as per above in every Cell | ||||||
| For Present Value Factor (PVF), we can use the below formula, | ||||||
| Year 0 = | 1 | |||||
| Year 1 = | 1 / 1.10 | |||||
| Year 2 = | Result of year 1 / 1.10 | |||||
| Year 3 = | Result of year 2 / 1.10 | |||||
| Present Value = Inflow/ Outflow is multiply with present value factor | ||||||
| With Excel Formula we calculate as below, | ||||||
| Present value factor = | 10% | |||||
| Period | Particulars | Net Inflow/ Outflow (A) | ||||
| 0 | Outflow | $ -1,00,000.00 | ||||
| 1 | Inflow | $ 40,000.00 | ||||
| 2 | Inflow | $ 50,500.00 | ||||
| 3 | Inflow | $ 75,500.00 | ||||
| NPV = | 1,34,823.44 | |||||
| Formula = | =NPV(cell of NPV factor (10% in this case) , select the coloumn of inflow and outflow from year 0 to year 3) | |||||
