Beginning OpenOffice Calc: From Setting Up Simple Spreadsheets to Business Forecasting

Net Present Value (NPV)

Syntax: NPV(Discount; Value1; Value2; … Value30)

The NPV function returns the Net Present Value of an investment. Consider the coffee shop example, discussed previously, in connection with the IRR function.

To calculate the value of the investment after four years, you need to put into the NPV function the discount rate (such as inflation) and the cash flows for each year. Then, subtract the initial investment from the result of the NPV.

Let's assume that income flows are stored in cells D233:D236 and the initial investment, a negative value, are stored in cell B233:

=NPV(10%; D233:D236)+B233

This returns $64,563.55.

Figure 8-10. Sample result of the NPV function

The initial investment ought to be subtracted from ...