Net present value example. What is the NPV of a project

They play a vital role in the development of the economy and increasing its competitiveness. The problem of giving them a dynamic and non-alternative character is very relevant for modern Russia. With their help, quality is achieved new level means of production, increasing its volume, developing innovative technologies.

Is the topic of investment relevant for Russia? Perhaps the answer to this question will be the information from Rosstat for 2013, indicating that the annual flow foreign investment in the country's economy, compared to last year, increased by 40%. Overall, the accumulated foreign capital in the Russian economy at the end of last year amounted to 384.1 billion US dollars. The majority of investments (38%) are in the manufacturing industry. 18% of their volume is invested in trade and repairs, almost the same amount (17%) in the mining industry.

According to statistics, since 2012, economic observers have determined that Russia ranks sixth in the world in terms of its investment attractiveness and at the same time is the leader among the CIS countries in this indicator. Also in 2012, foreign direct investment in Russian market covered 128 large objects. The dynamics of the process are obvious. Already in 2013, according to Rosstat, the volume of foreign direct investment in the Russian economy alone increased by 10.1% and reached $170.18 billion.

There is no doubt that all these investments are being made in a meaningful way. The investor preliminary, before investing his funds, of course, evaluates the attractiveness of the project commercially, financially, technically, socially.

Investment attractiveness

The above statistics also have a “technical” side. This process is deeply understood according to the well-known principle, according to which you must first measure seven times. The essence of investment attractiveness as economic category lies in the benefit predetermined by the investor immediately before investing his capital in a specific company or project. When investing, pay attention to solvency and financial stability startuper at all stages of mastering the investments invested in him Money. Therefore, the structure of the investment itself, as well as its flows, must, in turn, be optimized.

This is achievable if the company making such an investment systematically carries out strategic management of investments in the startup. The latter is:

• a sober analysis of the long-term goals of its development;
• formation of an investment policy adequate to them;
• its implementation in compliance with the necessary control with constant cost adjustment in relation to market conditions.

The previous volume of the startup is studied, the possibility of reducing current costs and increasing the technological level of production is considered as a priority.

When forming a strategy, the legal conditions for its implementation are necessarily taken into account, the level of corruption in the economic segment is assessed, and the market forecast is carried out.

Methods for assessing investment attractiveness

They are divided into static and dynamic. When using static methods, a significant simplification is allowed - the cost of capital is constant over time. The effectiveness of static capital investments is determined by their payback period and efficiency ratio. However, such academic indicators are of little use in practice.

IN real economy Dynamic indicators are more often used to evaluate investments. The topic of this article will be one of them - net present value (NPV, also known as NPV). It should be noted that, in addition to it, they use such dynamic parameters as:

But still, among the above indicators, in practice, the central place remains with net present value. Perhaps the reason is that this parameter allows you to correlate cause and effect - capital investments with the amount of cash flows they generate. Imprisoned in its contents Feedback led to the fact that NPV is perceived as a standard investment criterion. What does this indicator still underestimate? We will also consider these questions in the article.

Fundamental formula for determining NPV

Referred to as discounted cash flow methods or DCF methods. Its economic meaning is based on comparison investment costs IC and adjusted future cash flows. Fundamentally, the NPV is calculated as follows (see formula 1): NPV = PV - Io, where:

• PV - current value of cash flow;
• Io is the initial investment.

The above NPV formula shows cash income in a simplified way.

Formula taking into account discount and one-time investment

Of course, the above formula (1) should be complicated, if only to show the discounting mechanism in it. Since the influx financial resources distributed over time, it is discounted using a special coefficient r, which depends on the cost of investment. By discounting the parameter, a comparison of cash flows that differ in time of occurrence is achieved (see formula 2), where:

The NPV formula should take into account the adjusted discount (coefficient r), determined by the investor’s analysts in such a way that both the inflow and outflow of funds are taken into account for the investment project in real time.

According to the methodology described above, the relationship between investment efficiency parameters can be represented mathematically. What pattern does the formula that defines the essence of NPV express? What does this indicator reflect what the investor receives? cash flow after he has implemented the investment project and recouped the costs provided for in it (see formula 3), where:

• CF t - investment payments for t years;
• Io - initial investment;
• r - discount .

Given above) is calculated as the difference between the total cash receipts updated at a certain point in time for risks and the initial investment. Therefore her economic content(meaning the current version of the formula) is the profit received by the investor with a powerful one-time initial investment, i.e. the added value of the project.

In this case, we are talking about the NPV criterion. Formula (3) is a more realistic tool for a capital investor, considering the possibility of making an investment from the point of view of subsequent benefits. Operating with cash flows updated at the current time, it is an indicator of benefit for the investor. Analysis of its results really influences his decision: to invest or abandon them.

What do negative NPV values ​​tell an investor? That this project is unprofitable and investments in it are unprofitable. It has the opposite situation with a positive NPV. In this case investment attractiveness the project is high, and accordingly, such an investment business is profitable. However, it is possible that the net present value is zero. It is curious that investments are made under such circumstances. What does this NPV indicate to the investor? That this investment will expand the company's market share. It will not bring profit, but it will strengthen the state of the business.

Net present value for a multi-step investment strategy

Investment strategies change the world around us. The famous American writer and businessman Robert Kiyosaki said well on this topic that it is not the investment itself that is risky, but the lack of management of it. At the same time, the constantly progressing material and technical base forces investors not to make one-time, but to periodic investments. The NPV of the investment project in this case will be determined by the following formula (3), where m is the number of years during which investment activities will be implemented, I is the inflation coefficient.

Practical use of the formula

Obviously, making calculations using formula (4) without using auxiliary tools is a rather labor-intensive task. Therefore, it is quite common practice to calculate return on investment indicators using spreadsheet processors created by specialists (for example, implemented in Excel). It is typical that to assess the NPV of an investment project, several investment streams should be taken into account. At the same time, the investor analyzes several strategies at once in order to finally understand three questions:

• -what volume of investment is needed and in how many stages;
• -where to find additional sources of financing and lending if necessary;
• -whether the volume of projected revenues exceeds the costs associated with investments.

The most common way to practically calculate the real viability of an investment project is to determine the NPV 0 parameters for it at (NPV = 0). The tabular form allows investors, without wasting extra time, without seeking the help of specialists, to visually present various strategies in a minimum amount of time and, as a result, choose the most efficient option for the investment process.

Using Excel to Determine NPV

How in practice do investors make forecast NPV calculations in Excel? We will present an example of such a calculation below. Methodological support for the very possibility of determining the effectiveness of the investment process is based on a specialized built-in NPV() function. This is a complex function that works with several arguments typical of the net present value formula. Let's demonstrate the syntax of this function:

NPV(r; Io;C4:C11), where (5) r is the discount rate; Io - initial investment
CF1: CF9 - project cash flow for 8 periods.

In general, based on an initial investment of RUB 2.0 million. and subsequent cash flows at nine stages of the investment project and a discount rate of 10%, net discounted income NPV will amount to 186.39 thousand rubles. The dynamics of cash flows can be presented in the form of the following diagram (see diagram 1).

Diagram 1. Cash flows of an investment project

Thus, we can draw a conclusion about the profitability and prospects of the investment shown in this example.

Net present value chart

A modern investment project (IP) is being considered today economic theory in the form of a long-term capital investment calendar plan. At each time stage it is characterized certain income and costs. The main item of income is the proceeds from the sale of goods and services, which are the main purpose of such an investment.

To build an NPV chart, you should consider how this function(materiality of cash flows) depending on the argument - the duration of investments of different NPV values. If for the above example, then at its ninth stage we obtain the total value of private discounted income of 185.39 thousand rubles, then, limiting it to eight stages (say, by selling the business), we will achieve a NPV of 440.85 thousand rubles. Seven - we will enter a loss (-72.31 thousand rubles), six - the loss will become more significant (-503.36 thousand rubles), five - (-796.89 thousand rubles), four - ( -345.60 thousand rubles), three - (-405.71 thousand rubles), limited to two stages - (-1157.02 thousand rubles). These dynamics show that NPV of the project tends to increase over the long term. On the one hand, this investment is profitable, on the other hand, the investor’s sustainable profit is expected from approximately the seventh stage (see diagram 2).

Diagram 2. NPV chart

Selecting an investment project option

When analyzing Diagram 2, two alternative options for a possible investor strategy are revealed. Their essence can be interpreted extremely simply: “What to choose - a smaller profit, but immediately, or a larger one, but later?” Judging by the graph, NPV (net present value) temporarily reaches a positive value at the fourth stage of the investment project, but subject to a longer investment strategy We are entering a phase of sustainable profitability.

In addition, we note that the NPV value depends on the discount rate.

What does the discount rate take into account?

One of the components of formulas (3) and (4), by which the NPV of a project is calculated, is a certain discount percentage, the so-called rate. What does it show? Mainly the expected inflation index. In a sustainable society it is 6-12%. Let's say more: the discount rate directly depends on the inflation index. Let us recall a well-known fact: in a country where it exceeds 15%, investments become unprofitable.

We have the opportunity to check this in practice (we do have an example of calculating NPV using Excel). Let us remember that the NPV indicator we calculated at a discount rate of 10% at the ninth stage of the investment project is 186.39 thousand rubles, which demonstrates profit and interests the investor. Let's replace the discount rate in the Excel table with 15%. What will the NPV() function show us? The loss (and this at the end of the nine-stage process is 32.4 thousand rubles. Will the investor agree to a project with a similar discount rate? Not at all.

If we conditionally reduce the discount to 8% before calculating NPV, then the picture will change to the opposite: net present value will increase to 296.08 thousand rubles.

Thus, there is a demonstration of the advantages of a stable economy with low inflation for successful investment activity.

Largest Russian investors and NPV

What are the consequences of investors successfully accounting for winning strategies? The answer is simple - to success! Let's present the rating of the largest Russian private investors based on last year's results. The first position is occupied by Yuri Milner, co-owner of Mail.ru Group, who founded the DTS fund. He successfully invests in Facebook, Groupon Zygna. The scale of its capital investments is adequate to modern world ones. Perhaps that is why he occupies 35th position in the world ranking, the so-called Midas List.

The second position goes to Viktor Remsha, who made a brilliant deal in 2012 to sell 49.9% of the Begun service.

The third position is occupied by the co-owner of about 29 Internet companies, including the Ozon.ru megamarket. As we can see, the three largest domestic private investors are investing in Internet technologies, i.e., the sphere of intangible production.

Is this specialization accidental? Using the tools for determining NPV, let's try to find the answer. The above investors, due to the specifics of the Internet technology market, automatically enter the market with a smaller discount, maximizing their benefits.

Conclusion

Modern business planning, in terms of calculations of return on investment and sensitivity to changes in expenses, currently widely uses preliminary efficiency analysis, including the determination of net present value. For investors, it is of great importance to determine the sustainability of the indicators of the basic version of the investment project.

The universality of NPV makes it possible to do this by analyzing the change in the parameters of an investment project at its zero value. In addition, this is a fairly technologically advanced tool, implemented for a wide range of users in standard spreadsheet processors using the functions built into them.

It is so popular that there are even online calculators for determining it on the Russian-language Internet. However, Excel tools allow you to analyze more investment strategy options.

Making decisions related to investment of funds is an important stage in the activities of any enterprise. To effectively use raised funds and obtain maximum return on invested capital, a thorough analysis of future income and costs associated with the implementation of the investment project under consideration is necessary.

The task financial manager is the selection of such projects and ways of their implementation that will provide a cash flow that has the maximum present value compared to the cost of the required capital investments.

There are several methods for assessing the attractiveness of an investment project and, accordingly, several key performance indicators. Each method is based on the same principle: as a result of the implementation of the project, the enterprise should make a profit (the enterprise’s own capital should increase), while various financial indicators characterize the project from different angles and may meet the interests of various groups persons related to to this enterprise, - creditors, investors, managers.

When assessing the effectiveness of investment projects, the following main indicators are used:

Payback period - PP (Payback Period)

Net Present Value – NPV (Net Present Value)

Internal rate of return –IRR (Internal Rate of Return)

Profitability Index – PI (Profitability Index)

Each indicator is at the same time a decision-making criterion when choosing the most attractive project from several possible ones.

Payback period of the project pp (Payback Period)

The payback period is defined as the expected number of years required to fully recover investment costs. The payback period is calculated as follows:

T OK = number of years preceding the payback year + Unrecovered cost at the beginning of the payback year / Cash inflow during the payback year

Calculated using the formula:

Where: T OK – payback period for project costs (investments) CFt – cash flow from the investment project in period t; I 0 - initial costs; n – sum of the number of periods.

This indicator determines the period during which investments will be “frozen”, since real income from the investment project will begin to flow only after the payback period. When selecting options, preference is given to projects with the shortest payback period.

It is advisable to calculate the “payback period” indicator for projects financed through long-term obligations. The payback period for the project must be shorter than the period for using borrowed funds established by the lender.

The indicator is a priority in that if the main thing for an investor is the fastest possible return on investment, for example, choosing ways of financial recovery of bankrupt enterprises. The disadvantages of this indicator are as follows

First, the calculations ignore income received after the proposed payback period of the project. Consequently, when selecting alternative projects, serious miscalculations can be made if we limit ourselves to using only this indicator.

Secondly, using this indicator to analyze the investment portfolio as a whole requires additional calculations. The payback period for the portfolio as a whole cannot be calculated as a simple average.

Net present value – npv (Net Present Value)

NPV - net present value - is the present value of future cash receipts discounted at the market interest rate, minus modern estimates of the cost of investments. We can say that NPV is the difference between the expected inflow of funds received as a result of project investments and the expected outflow of funds.

NPV = PV/I

PV - Discounting (Present Value)- this is the determination of the value of cash flows relating to future periods.

NCF (Net Cash Flow) - Net cash flow (orR 1 + R 2 + R 3 –annual cash receipts duringnyears)

r - discount rate

n - period of the analyzed project

i - calculation step (month, quarter, year), i=1, 2, ...,n

The criterion for project acceptance is a positive NPV value. In cases where it is necessary to make a choice from several possible projects, preference should be given to the project with a larger net present value. (Positive value of reduced net worth means that the present value of income exceeds investment costs and, as a result, provides additional opportunities to increase investor wealth. A zero net present value is an insufficient basis for making a decision to implement an investment project.)

At the same time, a zero or even negative NPV value does not indicate the unprofitability of the project as such, but only its unprofitability when using a given discount rate. The same project implemented by investing cheaper capital or with a lower required return, i.e. with a smaller value of i, can give a positive net present value.

Advantages and disadvantages of the net present value (NPV) indicator The advantages of net present value include:

clarity of the indicator for management decisions when choosing an investment object;

the use of a discount rate reflects the property of the value of money to depreciate;

The discount rate may include additional project risks.

Disadvantages of net present value include:

the complexity of calculating the discount rate can distort the results of assessing the NPV indicator.

difficulty in forecasting cash flows. Although the cash flows of the enterprise are determined, these are only forecast values ​​that may change in the process;

failure to take into account the intangible advantages and values ​​of the enterprise.

Grade economic efficiency investment project.

First of all, it is necessary to decide what is meant by the term “project effectiveness”. IN Methodical recommendations on performance assessment investment projects The effectiveness of an investment project is understood as “a category that reflects the project’s compliance with the goals and interests of the project participants.”

To assess the effectiveness of investment projects, they are used different kinds indicators: indicators of effect, profitability, payback and financial indicators. Below is a brief description of each of the groups and some of the indicators included in it. Some indicators take into account the time value of money, and some do not. Those indicators that take into account the time value of money (NPV, IRR, DPB) are based on the basic concept of finance theory - DCF (Discount Cash Flows), since a discounting operation is performed.

A common feature of the indicators described below is that they evaluate the project statically and without taking into account the uncertainty that is encountered in practice. Project risk is either taken into account in the discount rate or not taken into account at all.

Effect indicators.

Net undiscounted income

Net undiscounted income is the accumulated net income for the entire billing period, calculated by the formula

where is the net cash flow of period t.

This indicator does not take into account the time value of money and therefore its use is incorrect from the point of view of financial theory. But, despite this drawback, this indicator is used in practice in practice.

Net present value (NPV)

Net Present Value (NPV) is today a generally accepted indicator of the effectiveness of investment projects. Net present value is the value obtained by discounting separately for each time period the difference of all outflows and inflows (income and expenses) accumulating over the entire period of operation of the investment object at a fixed, predetermined interest rate (discount rate).

(2)

where is investment in period t,

Net cash flow of period t,

Discount rate

n – project duration (number of periods t).

The method for assessing the effectiveness of investment projects based on net present value is based on the assumption that it is possible to determine an acceptable discount rate to determine the current value of future income. If the net present value is greater than zero, the project can be accepted for implementation; if it is less than zero, it should be rejected.

The widespread use of net present value is due to its advantages compared to other methods for assessing the effectiveness of projects. In particular, this method allows you to take into account the entire period of operation of the project and the cash flow schedule.

The disadvantages of this indicator of investment efficiency include: - the discount rate is usually taken unchanged for the entire investment period (the period of the project); - the difficulty of determining the appropriate discount factor; - impossibility of accurately calculating the profitability of the project.

Using the net present income method provides an answer to the question of whether the analyzed investment option contributes to an increase in market value investor firm, but does not indicate the relative magnitude of such an increase. In addition, the NPV criterion does not allow comparing, for example, projects with the same NPV but different capital intensity.

Investors, when deciding to finance certain projects, often use special indicators to assess their profitability. Depending on how effective the planned investments will be, the final choice is made and the scope of application of the capital is determined. A popular and quite effective indicator in this matter is net present value (NPV). What does it mean, how is it calculated and what questions does it answer for the investor? You will learn about this from the article below.

The concept of NPV

Net present value is also called net present value or current value. IN international practice It is customary to use the abbreviation NPV, which stands for Net Present Value. It represents the sum of all discounted values ​​of inflows and outflows for the project, given to the present moment in time. The difference between cash receipts and costs incurred (investments), determined to date, is called net present value. Discounting income allows an investor to compare projects with different time parameters and make an informed decision about their financing.

What is NPV used for?

The main purpose of this indicator is to give a clear understanding of whether it is worth investing in a particular investment project. Often the choice is made between different plans not only taking into account the duration life cycle, but also with an eye to the timing of investments, the amount and nature of incoming income from a particular business. Net present value allows you to “erase” the time frame and bring the expected final result(its value) to one point in time. This makes it possible to see the real effectiveness of investments and the benefits that can be obtained from the implementation of each project. The investor clearly sees the profit, which means he can confidently give preference to one of the alternative investments - the one with a larger NPV.

NPV calculation: formula

Discounted income is defined as the difference between integral income and expenses, reduced to a zero period ( today). The formula for calculating NPV is as follows:

NPV (NPV) = - IC + ƩCF t / (1 + i) t, where t = 1...n.

Let's consider what all the components of this formula mean:

1. IC is the initial investment, that is, the planned investment in the project. They are taken with a minus sign, since these are the investor’s costs for the implementation of a business idea, from which it is expected to receive a return in the future. Since investments are often made not at once, but as needed (distributed over time), they should also be discounted taking into account the time factor.
2. CF t is cash flow discounted with time. It is defined as the sum of all inflows and outflows in each period t (varies from 1 to n, where n is the duration of the investment project).
3. i is the discount rate (interest). It is used to discount all expected receipts into a single value at the current time.

If NPV > 0

As already mentioned, net present value is the standard method for assessing the effectiveness of a particular investment project. What conclusion can be drawn if, when calculating the NPV, a value greater than “0” is obtained? This situation suggests that from an economic point of view the investment is profitable. However, the final decision on financing can be made only after the NPV of all projects participating in the comparison has been determined. You should choose (all other things being equal) the one with the largest NPV.

If NPV< 0

If, when calculating the net present value of an investment project, a negative value was obtained, the investment will not bring profit. Thus, choosing a project with NPV< 0, инвестор не только не заработает, но и потеряет часть своих денежных средств. Здесь решение однозначное - отказ от финансирования.

If NPV = 0

It also happens that the discounted income turns out to be zero. That is, taking into account the time factor, the investor will not lose anything, but will not earn anything either. Usually such projects are not taken on, with the exception of some cases. For example, if the implementation of a business idea has, in addition to financial, another, more important interest - social, for example.

Project profitability based on NPV and PI

The present income is closely related to such an indicator as the project profitability index. The latter is an important criterion for whether the project will be beneficial to the investor. To determine it, the amount of discounted income should be divided by the amount of all planned costs: ƩCF t / (1 + i) t / IC. If the profitability index > 1 (NPV > 0), then the investment will pay off. If P.I.< 1 (NPV < 0), то инвестор понесет убытки. Если равен 1, то никакого результата от инвестиций не будет (NPV = 0).

Advantages of calculating NPV

The advantage of this indicator is the fact that it takes into account the cost of financial assets over time by discounting them to one period. In addition, NPV allows you to include the risk of project implementation in the calculation. This is achieved through the use of different discount rates - than more bet percent, the higher the risk (and vice versa). In general, the NPV indicator can be called a fairly clear criterion for making a decision on business financing.

Disadvantages of NPV

The disadvantages of using the indicator include the following: despite the fact that discounted income is included in the calculation (and often they take into account the level of inflation), they are only forecast values ​​and cannot guarantee a certain outcome of events. It is also often difficult to accurately calculate the discount rate, especially if multidisciplinary projects are involved in the assessment.

Example of NPV calculation

Let's look at an example of how NPV can help a company decide to launch a new product line (planned over three years). Let’s say that to implement this event you will need to incur the following expenses: 2 million rubles at a time (that is, in the period t = 0) and 1 million every year (t = 1-3). It is expected that the annual cash inflow will be 2 million rubles (including taxes). The discount rate is 10%. Let's calculate the net present value for this project:

NPV = -2/(1 + 0.1) 0 + (2 - 1)/(1 + 0.1) 1 + (2 - 1)/(1 + 0.1) 2 + (2 - 1)/ (1 + 0.1) 3 = -2 + 0.9 + 0.83 + 0.75 = 0.48.

So we can see that the implementation of this project will bring the company a profit of 480 thousand rubles. The event can be called economically profitable, and it is better for the company to invest money in this business plan if there are no other options for investing capital. However, the amount of profit is not that large for the company, so if there are alternative projects, their NPV should be calculated and compared with this one. Only after this can a final decision be made.

Conclusion

The net present value indicator is widely used both in Russian and international practice when determining the effectiveness of investment projects. It gives a fairly clear idea of ​​how profitable the investment will be. An undoubted advantage of the NPV indicator is that it determines the change in the value of cash flows over time. This allows you to take into account factors such as the level of inflation, as well as compare projects of different duration and frequency of receipts. Of course, NPV is not a criterion without its shortcomings. Therefore, along with it, other performance indicators are used to evaluate investment projects. However, this fact does not detract from the advantages of NPV as an important component of making these financial decisions.

NPV (abbreviation in English - Net Present Value), in Russian this indicator has several variations of the name, among them:

• net present value (abbreviated NPV) is the most common name and abbreviation, even the formula in Excel is called exactly that;
• net present value (abbreviated NPV) - the name is due to the fact that cash flows are discounted and only then summed up;
• net present value (abbreviated NPV) - the name is due to the fact that all income and losses from activities due to discounting are, as it were, reduced to the current value of money (after all, from the point of view of economics, if we earn 1,000 rubles and then actually receive less than if we received the same amount, but now).

NPV is an indicator of the profit that participants in an investment project will receive. Mathematically, this indicator is found by discounting the values ​​of net cash flow (regardless of whether it is negative or positive).

Net present value can be found for any period of time of the project since its beginning (for 5 years, for 7 years, for 10 years, and so on) depending on the need for calculation.

What is it needed for

NPV is one of the indicators of project efficiency, along with IRR, simple and discounted payback period. It is needed to:

1. understand what kind of income the project will bring, whether it will pay off in principle or is it unprofitable, when it will be able to pay off and how much money it will bring at a particular point in time;
2. to compare investment projects (if there are a number of projects, but there is not enough money for everyone, then projects with the greatest opportunity to earn money, i.e. the highest NPV, are taken).

Calculation formula

To calculate the indicator, the following formula is used:

• CF - the amount of net cash flow over a period of time (month, quarter, year, etc.);
• t is the time period for which the net cash flow is taken;
• N is the number of periods for which the investment project is calculated;
• i is the discount rate taken into account in this project.

Calculation example

To consider an example of calculating the NPV indicator, let’s take a simplified project for the construction of a small office building. According to the investment project, the following cash flows are planned (thousand rubles):

The project discount rate is 10%.

Substituting into the formula the values ​​of net cash flow for each period (where negative cash flow is obtained, we put it with a minus sign) and adjusting them taking into account the discount rate, we get the following result:

NPV = - 100,000 / 1.1 + 31,000 / 1.1 2 + 32,500 / 1.1 3 + 33,000 / 1.1 4 + 34,500 / 1.1 5 = 3,089.70

To illustrate how NPV is calculated in Excel, let's look at the previous example by entering it into tables. The calculation can be done in two ways

1. Excel has an NPV formula that calculates the net present value, to do this you need to specify the discount rate (without the percent sign) and highlight the range of the net cash flow. The formula looks like this: = NPV (percent; range of net cash flow).
2. You can create an additional table yourself where you can discount the cash flow and sum it up.

Below in the figure we have shown both calculations (the first shows the formulas, the second the calculation results):

As you can see, both calculation methods lead to the same result, which means that depending on what you are more comfortable using, you can use any of the presented calculation options.