Most analysts use Excel to calculate NPV. You can input the present value formula, apply it to each year's cash flows, and then add together each year's discounted cash flows, minus expenditures ...

This Technology Workshop illustrates how to leverage a number of functions to perform calculations in Excel involving the time value of money.

The interest rate can also be a discount rate, such as the current rate of inflation; in this case, the annuity formula discounts a series of future payments to calculate their present value.

Find out how to use Microsoft Excel to calculate the present value of a fixed annuity, including a calculation example. The calculation doesn't account for taxes.

As mentioned, net present value is not specific to investing in stocks or other securities. Businesses can also use net present value formulas to determine where to allocate their capital.

The present value of an annuity is the current value of future payments from that annuity, given a specified rate of return or discount rate.