In MS-Excel 2007, NPV(rate, value1, [value 2], ...) is a financial fun

In MS-Excel 2007, NPV(rate, value1, [value 2], …) is a financial function that returns

the net present value of an investment based on discount rate and series of future payments and income

the number of periods for an investment based on periodic, constant payments and constant interest rate

the future value of an investment based on periodic, constant payments and constant interest rate

the future value of an initial principal after applying a series of compound interest rates

Answer is Right!

Answer is Wrong!

This question was previously asked in

UPSC CISF-AC-EXE – 2019

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The correct option is A.

In MS-Excel, the NPV (Net Present Value) function calculates the present value of a series of cash flows based on a specified discount rate. It is used to evaluate the profitability of an investment or project by bringing all future cash flows (both positive and negative) back to their present-day value. Option A accurately describes this function: “the net present value of an investment based on discount rate and series of future payments and income”.

The NPV function assumes that cash flows occur at the end of each period. If cash flows occur at the beginning of the period, the NPV calculation needs adjustment, often by using the XNPV function for uneven dates or a combination of NPV and the initial investment outside the function.

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