How to Find Net Present Value (NPV)
The TI-83 Plus and TI-84 Plus Calculators have a built-in function to find Net Present Value (NPV) of a financial investment. Let’s work through an example.
Example: Find the net present value of buying an investment that costs $135,000. In year 2, it returns $50,000. In year 3, it returns $40,000. In year 4, it returns $30,000. In year 5, it returns $50,000. The interest rate is 7%.
To solve the problem for NPV:
- Press [2nd][FINANCE]. Choose 7:npv(.
- For this problem, enter npv(7, -135000, {50000, 40000, 30000}, {2, 1, 1,}).
- Press [ENTER] to calculate the NPV. You should get an NPV of $9300.20
September 6th, 2007 at 6:41 am
Hey, just wanted to comment on both the internal rate of return and Net Present Value tutorials. Thank you very much for posting these tutorials, but it would have been even more helpful had you posted the argument types that the functions take (e.g. IRR (interest rate, cost, {list of cash flows}, {corresponding frequencies}), followed by the example.
Again, thank you very much. You saved me the trouble of purchasing a financial calculator.
October 29th, 2007 at 3:30 pm
this is not working . ihave entered exactly
March 27th, 2008 at 9:58 pm
Should be: npv(7, -135000, {50000, 40000, 30000, 50000}, {1, 1, 1, 1}).
The frequency would only be {2, 1, 1} if the payouts were {50000, 50000, 40000, 30000}…..i.e. a “2″ for frequency should only be used if the same amount is used for consecutive periods.
October 7th, 2008 at 10:28 am
Thanks for your page…helped me a lot!
But Brian was right…when u calculate the npv the way you say it, you get something around 10000 and not the 9300.20 u said…so you cheated a bit! *smile*
October 25th, 2008 at 3:55 pm
The Net Present Value of Cash Flow…
We started a discussion on the importance and description of cash flow for the operating firm. You can find that post here: cash flow intro.
Moving forward now to the topic of net present value of cash flow (or NPV). An investment project generally sh…
October 29th, 2008 at 9:29 am
how do u enter the commas and stuff? i have a ti 83 plus
November 22nd, 2008 at 1:15 am
Brian Hughes: Thank you for clarifying that the 2 should be a one! I was confused.
and to Bill: the comma key is above the 7, and the brackets are next to the comma but you must press 2nd key first.
December 13th, 2008 at 10:43 pm
Thanks for the help! I couldn’t figuere out what I was doing wrong before but thanks to Brian he laid it out well! to ojojoj… check your numbers I for example entered 5000 insted of 50000 and the answer was way off.
June 19th, 2009 at 4:35 am
Brian Hughes is correct, thank you. This should not be posted seeing as it is wrong. Look elsewhere for your advice.