Using NPV Monthly

[JP SIngh]

I am not an accountant hence my language maynot sound very "fianacial" but i
do have a question

I understand that NPV funciton in excel calculates the results annually or
for 12 months.

How can get the NPV value for each month?

Does that make sense?

Thanks

 

[Fred Smith]

In fact, like almost all financial functions, NPV works with a *periodic*
interest rate. In other words, NPV doesn't care what the period is (it could
be annually, quarterly, monthly, etc.). NPV requires that the rate be for
the same period as the amounts. If you give NPV a series of monthly amounts,
it assumes your rate is a monthly rate.

It's your job to ensure the amounts and rate are for the same period. Once
done, Excel will calculate NPV properly.