Net Present Value (NPV) - Basics, Formula, Calculations in Excel (Step by Step)

In this video, we will talk about the Net Present Value (NPV), its meaning, formulas, calculations, and its uses.
00:00 - Introduction
01:05 - Future Value Concept
05:11 - Present Value Concept
08:47 - NPV - Net Present Value of Project
12:31 - NPV Formula
13:50 - NPV Calculation in Excel
16:14 - NPV Graph Profile
22:36 - NPV Limitation
What is NPV?
Net Present Value is primarily used to assess a project's profitability and is calculated as the difference between the present value of cash inflows and the present value of cash outflows over the project's time period.
Formula for NPV = NPVt=1 to T = ∑Xt / [(1+R) t - X0]
Two parts of NPV:
1. Cash Inflows from Investment
2. Cost of Investments in the project
Uses of NPV:
1. It compares both cash inflow and outflow
2. It offers a conclusive decision
3. Very easy to calculate
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For more details, you can refer to our article at -www.wallstreetmojo.com/net-pr...
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Пікірлер: 42

  • @priyapillai3449
    @priyapillai34494 ай бұрын

    Thank you so much for the video. I was struggling to understand all these terms, you made it a breeze. Very clear and concise. Thank you again for sharing your knowledge very skillfully.

  • @wallstreetmojo

    @wallstreetmojo

    3 ай бұрын

    Glad it was helpful!

  • @beccaheller3052
    @beccaheller30528 ай бұрын

    Thank you so much for this video. You make it so easy to understand and walking step-by-step through the Excel formulas is huge!

  • @wallstreetmojo

    @wallstreetmojo

    8 ай бұрын

    Glad we're on the same page, cheers!

  • @WorDouglas8
    @WorDouglas83 ай бұрын

    Hi I though this was well explained and great application. Request - Can you do a video that explaine Pay Back, NPV and IRR and at the end a comparision of the differences of all three investment tools PLEASE!

  • @lindae-da2444
    @lindae-da24445 ай бұрын

    Thank you Vaidya, a really clear and well-illustrated breakdown of NPV - currently studying MSc and there are so many poorly explained examples available. I will definitely refer to your videos in the future.

  • @wallstreetmojo

    @wallstreetmojo

    4 ай бұрын

    Your comment made our day, thank you!

  • @afzal1jeddahwala
    @afzal1jeddahwala Жыл бұрын

    Hi Dheeraj, Have read your articles and postings on the Web. Glad to see you on KZread......!!

  • @shabeernaha
    @shabeernaha Жыл бұрын

    🎉🎉 Very simple and crystal clear.Thanks Vaidya

  • @wallstreetmojo

    @wallstreetmojo

    11 ай бұрын

    Glad you liked it

  • @digvijaychoudhari4128
    @digvijaychoudhari41282 жыл бұрын

    Good explanation of npv sir

  • @user-kh2xc2ii7g
    @user-kh2xc2ii7g10 ай бұрын

    Great tutorial so far that I came a cross. I'm currently pursuing my MBA and your videos on Finance and Accounts are exceptional. Thank you.

  • @wallstreetmojo

    @wallstreetmojo

    9 ай бұрын

    Your comment made our day, thank you!

  • @mohitsingha210
    @mohitsingha21010 ай бұрын

    Thank you. Very well explained, including the fact that all the inputs are assumption based!

  • @wallstreetmojo

    @wallstreetmojo

    10 ай бұрын

    You're very welcome!

  • @MuhammadSalmanHabib
    @MuhammadSalmanHabib3 ай бұрын

    Very useful, explained like a Pro.

  • @wallstreetmojo

    @wallstreetmojo

    Ай бұрын

    🎁Check out our Free and Paid courses at www.wallstreetmojo.com/all-courses/

  • @braysonfadhili5891
    @braysonfadhili58918 ай бұрын

    Very powerful tutorial. Thank you and be blessed

  • @wallstreetmojo

    @wallstreetmojo

    8 ай бұрын

    Thanks for sharing your perspective!

  • @lolingthornton8189
    @lolingthornton8189 Жыл бұрын

    Thank you for this video. I'm in the process of taking my Priniciples of Finance course in college, it's great to see these formulas in real time. I look forward to reviewing your videos on this subject going forward.

  • @wallstreetmojo

    @wallstreetmojo

    11 ай бұрын

    Appreciate your feedback, more content coming soon!

  • @francoisandrieu8101
    @francoisandrieu8101 Жыл бұрын

    you are incredible

  • @samwai4424
    @samwai4424 Жыл бұрын

    Good explanation of NPV. It's simple and easy to understand. Can you explain how to create graph using excel. I'm a beginner here.

  • @richavora7819
    @richavora78193 ай бұрын

    fantastically described

  • @wallstreetmojo

    @wallstreetmojo

    Ай бұрын

    🎁Check out our Free and Paid courses at www.wallstreetmojo.com/all-courses/

  • @shahbazyandav82
    @shahbazyandav82 Жыл бұрын

    Thanks a lot for this useful video

  • @wallstreetmojo

    @wallstreetmojo

    11 ай бұрын

    Thanks for watching, glad you liked it!

  • @flaviot5226
    @flaviot522610 ай бұрын

    Thank you very much very intersting and very good explanation; the only thing I couldn't catcht how do you design the GRAPH

  • @rafiuahmed
    @rafiuahmed2 жыл бұрын

    Thank you Dheeraj. Amazing explanation of NPV. If you have a new project that has a setup period, for instance, the project takes 2 years to set up before cash inflows can start. Do you indicate the cash inflows as zero for the first 2 years?

  • @wallstreetmojo

    @wallstreetmojo

    2 жыл бұрын

    Yes, that's correct Rafiu!

  • @haritsanat1
    @haritsanat12 жыл бұрын

    And NPV is, given our accepted rate of return will the project cash flow result positive flow or negative flow. If it is positive we accept it otherwise reject it

  • @guzalkhonamanbaeva199
    @guzalkhonamanbaeva1993 ай бұрын

    Thanks a lot😊

  • @wallstreetmojo

    @wallstreetmojo

    Ай бұрын

    🎁Check out our Free and Paid courses at www.wallstreetmojo.com/all-courses/

  • @ellykappatos2064
    @ellykappatos20642 ай бұрын

    What about if the cashflows are considered a perpetuity and grow at a certain rate? Help!!

  • @haritsanat1
    @haritsanat12 жыл бұрын

    So present value is how much we need to invest now given our accepted rate of return

  • @kanchandatta4668
    @kanchandatta46685 ай бұрын

    What are the determinants of discount rate? Is it cost of capital + expected rate of interest rate?

  • @TheElBudo
    @TheElBudo5 ай бұрын

    In your example you use increasing cash flow, seeming to echo the years: 110 for year 1, 120 for year 2...This causes the PV values to also be regularly increasing all while using the $100 amount for clarity - but it's just a coincidence, no?

  • @SOLO19847
    @SOLO19847 Жыл бұрын

    best

  • @wallstreetmojo

    @wallstreetmojo

    11 ай бұрын

    Thanks for watching, glad you liked it!

  • @haritsanat1
    @haritsanat12 жыл бұрын

    If NPV is zero we earn exactly the accepted rate of return

  • @mabarbadminton6100
    @mabarbadminton61009 ай бұрын

    beautiful.... on point crystal clear

  • @wallstreetmojo

    @wallstreetmojo

    9 ай бұрын

    Thanks for sharing your perspective!