• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL
Help

Chapter 20. Building Discount Formulas > Net Present Value with Varying Cash Fl...

Net Present Value with Varying Cash Flows

The major advantage to using NPV() over PV() is that NPV() can easily accommodate varying cash flows. You can use PV() directly to calculate the break-even purchase price, assuming that the asset or investment generates a constant cash flow each period. Alternatively, you can use PV() to help calculate the net present value for different cash flows if you build a complicated discounted cash flow model such as the one shown for the rental property in Figure 20.6.

You don't need to worry about either of these scenarios if you use NPV(). That's because you can simply enter the cash flows as the NPV() function's values argument.


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint