Talk:Documentation/Calc Functions/NPV

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SF Comments

(1) Summary. Too much complexity in this statement which needs saving until later. Replace with “Returns the net present value for a series of periodic cash flows and a constant discount rate for each period”.
(2) Returns. Replace with – “Returns the net present value (in currency units) of a given series of periodic cash flows and a given constant discount rate.”. The same currency unit as that of the cash flows?
(3) Arguments, Rate. Insert space before open round bracket. Insert “decimal” before “fraction”. Insert “constant” before “discount”. Change “a period” to “each period”.
(4) Arguments, Number 1 etc. Insert space before “Number 254”. I think that an array with curly brackets is also allowed. The values may be both positive and negative. The order of the cash flows is significant; make sure that you arrange them in the correct sequence. Each number represents a cash flow at the end of a period. Each cash flow to be in the same currency unit?
(5) Arguments, 1st bullet. Is this correct? I could not reproduce.
(6) Additional details. Suggest including a link to Wikipedia’s “Net present value page”.
(7) Additional details. Please include the following explanation. “Unlike the PV function, NPV does not cater for cash flows at either the beginning or the end of a period; NPV assumes cash flows occur at the ends of periods. If the first cash flow of an investment occurs at the start of the first period, then do not include it in the arguments to the function call. Instead add it to the output of the NPV function to give a total NPV value.”
(8) Additional details. The Excel page claims a relationship between NPV and IRR. Can we try this for a few examples and check its validity? If it’s true it would be worth mentioning as NPV(IRR(Values), Values) = 0. (I’ve tried one set of cash flows and it worked – don’t forget the rules for IRR, which demands both +ve and -ve values).
(9) Examples, 1st and 2nd examples. Unexpected character in Returns column.
(10) Examples, all. Please replace the 2nd and 3rd sentences of the 1st example’s description with the following – “If an additional cash flow of -40 current units occurred at time 0 (the start of the first period), then the total net present value would be (49.43 – 40) or 9.43 currency units”. Please re-word the 2nd and 3rd examples in a similar way.

--Stevefanning (talk) 2020-11-20T20:51:04 (UTC)