Present Worth Analysis in Engineering Economics

On this topic, I mainly provide an example of how to use the Excel npv function to calculate Present  Worth. This is shown in the following exhibits:

Exhibit 1: In this example, the =npv function covers period of net cash flow from Year 1 to Year 5; then the formula add the Year 0 (Now) figure (which is a negative figure to show initial capital outlay for a project)

Exhibit 2: Online help information from Excel (note that in the =npv function, you need to provide the variable of interest rate [or cost of capital] and that the period is from year 1 to end of the project period:

References

1. On Net Present Value: http://en.wikipedia.org/wiki/Net_present_value
2. Panneerselvam, R. (2001) "Chapter 4: Present Worth Method of Comparison" Engineering Economics, Prentice-Hall of India.
3. Present value (video lecture): http://www.youtube.com/watch?v=6oCPsXb74FQ&feature=related