Excel NPV Function

The Excel NPV function is used to calculate the present value of unequal cash flows in time value of money calculations.

To calculate the net present value of a project, the original investment at the start of the project needs to be deducted from the answer provided by the Excel NPV function.

Last modified January 19th, 2023 by Michael Brown
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Excel NPER Function

The Excel NPER function is one of many Excel financial functions, and can be used to calculate the number of periods for a lump sum, annuity or annuity due to grow to a future value. In addition the function can also be used to calculate the number of periods it takes for a loan to be repaid.

Last modified July 16th, 2019 by Michael Brown
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Profitability Index Calculation

The profitability index (PI) of a series of cash flows is found by calculating the present value of all the cash flows from a project (PV) and dividing the value by the initial investment (I). The profitability index is sometimes referred to as the value investment ratio.

Last modified November 18th, 2019 by Michael Brown
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Effective Annual Rate Formula

The effective interest rate formula calculates the rate of interest for a year based on a nominal rate (i) compounded a number of times a year (m). The formula for annual interest rate is sometimes referred to as the annual equivalent rate formula or AER formula.

Last modified February 7th, 2023 by Michael Brown
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Present Value of a Lump Sum

The concept of the present value of lump sum is the starting point for many time value of money calculations including the present value of an annuity, and net present value calculations.

Last modified November 26th, 2019 by Michael Brown
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Future Value of a Lump Sum

The concept of the future value of lump sum is the starting point for all time value of money calculations.

If a lump sum (PV) is invested and earns interest at a rate (i), then over time (n), the lump sum will grow into a larger sum (FV).

Last modified February 22nd, 2023 by Michael Brown
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The Rule of 72

If money is invested in an account paying compound interest, the finance rule of 72 is a quick way to estimate the time it will take for the investment to double in value.

Last modified August 3rd, 2020 by Michael Brown
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Lump Sum Discount Rate Formula

The lump sum discount rate formula is used to calculate the discount rate (i) needed to compound a lump sum from its present value (PV) to a future value (FV) over a given number of periods (n).

Last modified February 14th, 2023 by Michael Brown
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Future Value Tables

The future value tables can be used to carry out future value calculations without the use of a financial calculator.

The tables give values for the future value factor for given values of the discount rate i, and the number of periods n.

Last modified March 17th, 2023 by Michael Brown
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