FormuladrillIs the project worth it?
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
The project costs 50,000 today (year 0) and returns cash in years 1 to 3. Calculate the net present value in B6 using the discount rate in B1.
What this exercise teaches
NPV discounts from period 1, so the year 0 outflow is added outside the function. Including it inside is the most common mistake.
A hint if you get stuck
Excel NPV treats the first value you give it as one period away. The cash at year 0 is not discounted at all.
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