# Problems w/ NPV

Hey can you tell me which NPV is wrong or whether both are wrong? Yr CF 0 15,000,000 1 4,000,000 2 4,000,000 3 4,000,000 4 4,000,000 5 4,000,000 6 7,000,000 oppt. cost= 19% My formula result gives -304464.1411 : -15000000+4000000*((1-1/((1+0.19)^5))/0.19)+7000000/((1.19)^6) But excel gives -255,852.22 ??? probably something really silly…

Your formula is correct. Try it in excel with NPV(rate, inflow year 1: inflow year 6)+year 0 outflow.

I got a NPV of 710 534.34. Anyone else get the same

I concur with -304,464.14 using my BA-II. Not really sure where the Excel number is coming from.

NPV = 304,464.1 with the trusty BA II Plus

gangrel Wrote: ------------------------------------------------------- > I concur with -304,464.14 using my BA-II. Not > really sure where the Excel number is coming from. From NPV(rate, value1,…), with value 1 being the cash outflow at 0

Use what map1 said. NPV(.19,CF1,CF2,CF3,CF4,CF5,CF6) + CF0 That gives you the right NPV. The way you initially calculated it was discounting each cash flow an additional year. The NPV in excel assumes the first value occurs at the end of the first period. So the discounted cash flows would be as follows 1.00 -12,605,042.02 2.00 2,824,659.28 3.00 2,373,663.26 4.00 1,994,675.01 5.00 1,676,197.48 6.00 1,408,569.31 7.00 2,071,425.46 NPV = -255,852.22 Where it should actually be 0.00 -15,000,000.00 1.00 3,361,344.54 2.00 2,824,659.28 3.00 2,373,663.26 4.00 1,994,675.01 5.00 1,676,197.48 6.00 2,464,996.30 NPV = -304,464.14

-304,464

Well id rather have my formula correct than excel. Il keep workin out the bugs. Thx everyone!

-304,464.1411 was the answer I got from BA-II plus

CFABLACKBELT Wrote: ------------------------------------------------------- > Well id rather have my formula correct than excel. > Il keep workin out the bugs. Thx everyone! You don’t need to know these formulas; you need to know how to use your calculator.