Using the NPV function in Excel is a bit tricky because of the way the function is implemented. By default, it is assumed that an investment is made one period before thevalue1date. For this reason, an NPV formula in its pure form works right only if you supply the initial investment c...
To calculate the NPV of a constant annuity (that is an investment that pays equal cash flows for a set number of periods), you figure the present value of the investment and subtract this amount from the initial cost. The present value of an annuity is the payment amount per period times...
is represented as negative because it is an outflow Example Constructing a Timeline Problem: Suppose you must pay tuition of $10,000 per year for the next four years. Your tuition payments must be made in equal installments of $5,000 each every 6 months. What is the timeline of your tui...