NPV in Excel

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  • čas přidán 11. 09. 2024
  • How to calculate NPV in Excel? Net Present Value (NPV) is a method of investment analysis that takes the time value of money into account. Let me show you two ways to calculate NPV in #Excel, and talk through the effect of NPV scenarios: what is the effect of a higher or lower discount rate on Net Present Value.
    Understand the concepts of #NPV and IRR: • NPV and IRR explained
    Learn how to calculate IRR in Excel: • IRR in Excel
    Philip de Vroe (The Finance Storyteller) aims to make strategy, finance and leadership enjoyable and easier to understand. Learn the business and accounting vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better stock market investment decisions. Philip delivers #financetraining in various formats: CZcams videos, classroom sessions, webinars, and business simulations. Connect with me through Linked In!

Komentáře • 53

  • @TheFinanceStoryteller
    @TheFinanceStoryteller  Před 4 lety +1

    Enjoyed the video? Then please subscribe to the channel, and watch my video on how to calculate IRR in Excel next: czcams.com/video/L0JCg5TXudc/video.html

  • @mevi1123
    @mevi1123 Před rokem +3

    Very useful and right to the points in such short video. Thanks!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před rokem +1

      Glad it was helpful! Have a look at the related video on IRR in Excel as well: czcams.com/video/L0JCg5TXudc/video.html

  • @leonardoniekepaikian7306
    @leonardoniekepaikian7306 Před 11 měsíci +2

    Very useful and easy to understand. Thanks

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před 11 měsíci

      Glad it was helpful! Related topics in this playlist: czcams.com/video/L0JCg5TXudc/video.html&pp=gAQBiAQB

  • @huweetie
    @huweetie Před rokem +1

    I've been going through self-study for NPV in terms of using in the practical field.
    I could definitely say that this vid is very helpful for me.
    Thanks for your vid., and appreciated for this channel. :)

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před rokem

      Great to hear!!!!! Please spread the word about the channel to friends and colleagues. Related videos on NPV, IRR, WACC, payback period in this playlist: czcams.com/video/N-lN5xORIwc/video.html

  • @bokker9348
    @bokker9348 Před rokem +3

    Hey, thanks for the help!
    My second method could not match with the first one. I did everything right but still different results

  • @muhammadraynaldi5648
    @muhammadraynaldi5648 Před 2 lety +1

    great video, it helps my group task

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před 2 lety

      Great to hear that, Muhammad! The related video on IRR in Excel could be helpful too: czcams.com/video/L0JCg5TXudc/video.html

  • @sharanyamurali3451
    @sharanyamurali3451 Před 8 měsíci +1

    Thank you so much for the whole series on NPV, IRR and WACC - it's been super helpful and easy to understand!
    My question is - How would this calculation look like if I were to calculate the NPV for a historical project? eg. starting in 2016. Would I do it the same way - Year 1 + NPV(DR, yearly cash flow)?

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před 8 měsíci

      Happy to help! Yes, move t=0 to the (historical) year of investment, and work from there.

    • @sharanyamurali3451
      @sharanyamurali3451 Před 8 měsíci +1

      Thank you so much for your help! @@TheFinanceStoryteller

  • @tingyuliu3943
    @tingyuliu3943 Před 3 lety +1

    really clear and helpful!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před 3 lety

      Nice to hear that! Take a look at the sequel as well: IRR in Excel czcams.com/video/L0JCg5TXudc/video.html

  • @richm3579
    @richm3579 Před 3 lety +1

    So helpful and knowledgeable!!

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před 3 lety +1

      I thank you very much! :-)

    • @richm3579
      @richm3579 Před 3 lety +1

      @@TheFinanceStoryteller I’m currently doing a case study about real estate acquisitions, and there are things like leverage and return on cost. Do you happen to have any videos about that?

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před 3 lety

      @@richm3579 Hello again! Yes, I do cover leverage on my channel, here's the link to the video: czcams.com/video/GESzfA9odgE/video.html

  • @andif.izdiharuddien9372
    @andif.izdiharuddien9372 Před 4 lety +5

    Could you explain what is discount rate ? Where does it come from ? Is it decided by the company that will take on the project ? I've just now learning excel and this is confuses me. Thanks before.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před 4 lety +1

      Hello Andi! Those are very good questions. I think my video on WACC vs hurdle rate will give you the answers you are looking for czcams.com/video/8EyFLdOTuHU/video.html and if you then want to dive deeper into WACC watch this one czcams.com/video/1O-DbtVueMw/video.html

    • @andif.izdiharuddien9372
      @andif.izdiharuddien9372 Před 4 lety +4

      @@TheFinanceStoryteller Yes, i've found the video. Damn, of course the opening have to be "this is the most intimidating concept in finance" lol. Thanks for the vid btw.

    • @andif.izdiharuddien9372
      @andif.izdiharuddien9372 Před 4 lety

      @@TheFinanceStoryteller Hey, it's me again. Could you explain what is Fama french 3 model factor ? I've stumbled upon this while learning about those beta in CAPM thingy. Or if you have any video refference to watch, thank you.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před 4 lety

      @@andif.izdiharuddien9372 Had never heard of it before, so did a quick search. "The Fama French 3-factor model is an asset pricing model that expands on the capital asset pricing model by adding size risk and value risk factors to the market risk factors. The model is essentially the result of an econometric regression of historical stock prices." As you probably figured out from my WACC video, I am not a fan of CAPM as it has very little predictive value (it cannot deal with the "unknown unknowns"). This Fama French model seems to be an extension of CAPM. Historical results provide no guarantee for the future! I would advise you to read the works of Nassim Taleb ("The Black Swan") instead.

  • @haikalsusanto3931
    @haikalsusanto3931 Před rokem +2

    thanks for the video! very helpful. in 2:08, how did u manage to make the denominator value continuously multiply by itself with a single click? i have to type in C5*C5 manually in each cell.

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před rokem +1

      Hello Haikal! I locked the column reference by using the $ sign. So for example, in cell D5 the formula is =$C5*C5 and in E5 the formula is =$C5*D5 and in F5 the formula is =$C5*E5. This way, you can use CTRL-C and CTRL-V to copy the formula across the cells. Hope that helps!

  • @kenmccready2870
    @kenmccready2870 Před 4 lety +1

    great job well explained .

  • @maxwellmuhanda7940
    @maxwellmuhanda7940 Před 4 lety +1

    very helpful thanks

  • @kenmccready2870
    @kenmccready2870 Před 4 lety +1

    Am I right in saying there is no value when the npv is at zero ?..it is just a reverance for the irr ,,as an investor we would need to attain an irr above our rrr,,,basic question i know love the subject ...thank you

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před 4 lety

      Correct. NPV < 0 reject the project as it is expected to "destroy" value. NPV > 0 accept as it is expected to create value. The higher the IRR, the better the expected (!) returns on the project. Here's the link to a playlist relating all the concepts involved, I think especially the WACC vs IRR video will help you put things in perspective: czcams.com/video/ZuH_q5crAWg/video.html

  • @maxwellmuhanda7940
    @maxwellmuhanda7940 Před 4 lety +2

    wen you reached cell c5 in discount rate you say multiply by itself then to the next cell am lost sir

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před 4 lety

      Hello Maxino! Maybe it helps to take a look at my discussion of the Net Present Value concept itself (along with present value and future value), as I did the Excel calculations in rows 5 and below very quickly in this video. Here's a link to my NPV video: czcams.com/video/N-lN5xORIwc/video.html

    • @andif.izdiharuddien9372
      @andif.izdiharuddien9372 Před 4 lety +1

      He was typing "$" so it became absolute cell. You see, when you're copying a formula to another cell, the original formula will be changed if it wasn't absolute. You should check out what is an absolute cell, cause my explanation wasn't really clear either i think.

  • @mrhkhansalman
    @mrhkhansalman Před 4 lety +1

    Thanks

  • @ubaidullahkhan9541
    @ubaidullahkhan9541 Před 2 lety +1

    As you have taken the nominal value of 400 for all the years, will the process be the same if these values vary each year?
    please reply

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před 2 lety +1

      Yes. Please play around with the spreadsheet using different inputs for investment and benefits, and you will see how NPV moves up and down. I talk through several scenarios in this video: czcams.com/video/1ZTIwmn1Cm0/video.html

    • @ubaidullahkhan9541
      @ubaidullahkhan9541 Před 2 lety +1

      @@TheFinanceStoryteller Thanks a lot Sir

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před 2 lety +1

      @@ubaidullahkhan9541 Happy to help!

  • @alternativevlog1180
    @alternativevlog1180 Před 4 lety +1

    when I put amount -60000£ my Excel in field B2 don't show brackets and don't hide "-" sign so in column B4 I am getting -22.617£ of investment in 5 years. Why it is that. I guess in B4 I should get 22£ amount?

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před 4 lety

      Hello Olga! I don't recognize the numbers you mention, as they are different from what I use in my example. Regarding the "-" sign versus the brackets (), this is a setting that is depending on the device you are using. Assuming you are using a Windows computer, then go to Windows Settings, Time & Language, Region. Different countries have different ways they write date formats, number formats, etc.

    • @alternativevlog1180
      @alternativevlog1180 Před 4 lety

      @@TheFinanceStoryteller hi, yes I am using my own numbers. Yes I use Microsoft Excel. Should i keep my number with - sign? But then i getting result wih - sign as well....

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před 4 lety

      @@alternativevlog1180 "-" for investments (cash outflows), positive numbers for benefits (cash inflows). If you share the numbers you input by year with me, then I will make the same calculation on my side, and we can check whether we have the same outcome, and how that outcome should be interpreted.

    • @alternativevlog1180
      @alternativevlog1180 Před 4 lety

      @@TheFinanceStoryteller hi, investment in year 0 is 60000£. Investment in 5 years. Return in each year expected 12500£. Need to find out if this investment is positive.

    • @alternativevlog1180
      @alternativevlog1180 Před 4 lety

      20% is wacc

  • @beckyschwartz206
    @beckyschwartz206 Před rokem +1

    What if the net value are the same

    • @TheFinanceStoryteller
      @TheFinanceStoryteller  Před rokem

      Then check whether the IRR czcams.com/video/aS8XHZ6NM3U/video.html or the Profitability Index czcams.com/video/Md5ocNqKHq8/video.html provides you a way of preferring one project over another.