Problem with Financial NPV Function

Hello

I'm not acustomed to these functions but Numbers, AppleWorks and neoOffice give the save result:



VAN is the french name for NPM.
It's difficult to imagine than Apple guys made the same error than the neoOffice ones.

Yvan KOENIG (from FRANCE mardi 26 février 2008 18:56:43)

Excel gives the same result as Numbers also.

Jerry

gerod,

I think that it is clear that the Numbers function NPV works correctly. But, that doesn't give you much help for us to say that. What is it about the function and the directions for use that you find inconsistent?

Jerry

could you please give us an example of the numbers you are using to get your incorrect answer so that we can corroborate your results.

Thanks,
Jason

I entered your example in neoOffice and got the same result than the one given by Numbers.

I'm afraid that you are using a wrong book 😉



Yvan KOENIG (from FRANCE mardi 26 février 2008 19:57:42)

Hello gerod,

Sorry that I was otherwise occupied for a couple of days. I hope that you check back here for my response. You are very close to your solution, as you can see. All you need for success is a little more understanding of how the NPV function works.

NPV only calculates present value for future payments and receipts, and it leaves the present payments and receipts for you to handle yourself. After all, there is no interest accumulation on a receipt or payment that just happened, so the NPV function in our spreadsheet doesn't want to see it as an argument.

You can test this for yourself if you only give the NPV function the present (Time-0) exchange of minus $100. It will return a reduced value, which you know would not make sense.

Here is the proper way to code the function, and as you can see it returns the value shown in your text.




Best regards,

Jerry

p.s. - It's been 44 years, but I still remember my Econ 101 class.

Hello

If I understand well, the examples given in the Help are odd.

They give the investment as 2nd parameter.



If it's right, it would be useful to report that.

Yvan KOENIG (from FRANCE mercredi 27 février 2008 18:22:28)

Yvan,

The important word in the description is "FUTURE". The initial investment is not a FUTURE cash flow. You are right that the -5000 is misleading.

Jerry

Message was edited by: Jerrold Green1

Jerrold Green1 wrote:
Yvan,

The important word in the description is "FUTURE". The initial investment is not a FUTURE cash flow. You are right that the -5000 is misleading.

So, there is no reason to give it in the example.
The OP is certainly not the only one user abused by this example (I was too).

Yvan KOENIG (from FRANCE mercredi 27 février 2008 21:36:1)