From the course: Investment Evaluation

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Solution 3: Calculate NPV using table values

Solution 3: Calculate NPV using table values - Microsoft Excel Tutorial

From the course: Investment Evaluation

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Solution 3: Calculate NPV using table values

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- [Instructor] If you want the work past solution, feel free to open up exercise file 03_04_Solution3. Let's get crackin'. If I think about the cash flow stream, I'll be able to figure out if Kevin should invest. So, based on the worksheet, I know I have an initial cash outflow of 1,500, so here in cell B13, I'll type in equals and then click on B3, and it's negative because it's an outflow. And to that, I'm going to subtract another value, and that's gonna be the upgrade costs, and again, I'm subtracting it because it's gonna be a cash outflow. So I'm gonna open up parentheses here, and click on cell B4, which is the upgrade cost, but I want the present value of that, 'cause remember, that thousand dollars is gonna be spend five years from now. So the present value of that is going to be found by multiplying the $1,000 by the factor .6806, which is the present value for one dollar, five years from now at a eight percent discount rate, and that's gonna be in cell B8. I'm gonna close…

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