FormuladrillAn NPV discounted one year too many
An Excel formula exercise from Formuladrill. Solve it with a formula bar on a live sheet in your browser, and it is checked the moment you submit.
The task
This sheet decides whether to invest: the project costs 40,000 today (year 0) and returns cash in years 1 to 3. Nadia worked the NPV out by hand and got a higher number than the sheet shows. One formula is wrong. Find it and fix it.
What this exercise teaches
Putting the year 0 outflow inside NPV discounts the whole project by one extra year, which understates the result. Add the year 0 cash outside the function: =B2+NPV(B1,B3:B5).
A hint if you get stuck
Excel NPV discounts the first value it is given by one full period. Which cash flow should not be discounted at all?
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