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.