### Method 1 – Using Generic Formula to Calculate Present Value of Uneven Cash Flows in Excel

Use a generic formula to calculate the present value of uneven cash flows in Excel.

We know that the generic formula for calculating the Present Value (PV) for a particular year is

`PV = CFn/(1 + r)^n`

Here,

**CFn**is the cash flow for a particular year**n**is the number of years**r**is the interest or discount rate for the year

Calculate the present value for each particular year. After calculating all the year’s present values, we will use **the SUM function** to add all the present values. This will give us the Present Value (PV) of the uneven cash flows.

Let’s go through the following steps to do the task.

- To calculate the present value of year 1, we will type the following formula in cell
**D5**.

`=C5/(1+$C$11)^B5`

** **

** ****Formula Breakdown**

**C5 →**is the Cash Flow for year**1**, which is**$1000**.**$C$11 →**is the discount rate, which is**13%**. As the discount rate is the same for all the years, we lock cell**D5**.**B5****→**is the number of years, here**B5**is 1.**$1000/(1+13%)^1 →**becomes**Output: $884.96****Explanation**:**$884.96**is the present value for year**1**.

- Press
**ENTER**.

As a result, you can see the result in cell **D5**.

- Drag down the formula with the
**Fill Handle**tool.

See in the cells** D5:D9**, the present value for each year.

Calculate the total present value of uneven cash flows. Use the** Sum **function.

- Type the following formula in cell
**C12**.

`=SUM(D5:D9)`

The** Sum** function adds the cells from **D5** to **D9**. All the present values of the cash flows will be added up to a single present value.

- Press
**ENTER**.

In cell **C12** you can see the Present Value.

### Method 2 – Using NPV Function in Excel

In this method, we will use **the NPV function** to calculate the present value of uneven cash flows quickly.

- Type the following formula in cell
**C12**.

`=NPV(C11,C5:C9)`

**
**

**Formula Breakdown**

**NPV(C11,C5:C9)****→**The**NPV**function uses a discount rate and a series of cash flows to determine the net present value of a financing system.**C11****→**is the discount rate.**C5:C9****→**is the series of cash flows.**NPV(13%,$1000:$2300)****→**becomes**Output: $5389.54****Explanation: $5389.54**is the present value of uneven cash flows.

- Press
**ENTER**.

See the present value in cell **C12**.

### Method 3 – Applying PV Function to Calculate Present Value of Uneven Cash Flows in Excel

In this method, we will apply **the PV function** to calculate the present value of uneven cash flows. Using the PV function, we will also calculate the present value for a particular year of investment.

We will also calculate the present value for each year using the PV function and the** SUM** function to add up the present values for all the years. Hence, we will get the present values of uneven cash flow.

- Yype the following formula in cell
**D5**.

`=PV($C$11,B5,0,C5)`

**Formula Breakdown**

**PV($C$11,B5,0,C5) →**based on a constant interest rate, the**PV**function calculates the present value of a cash flow.**$C$11 →**is the interest rate. In this case, it is**13%**.**B5****→**is the**nper**, is the total number of payment periods. The payment period is**1**.**0 →**is the**pmt**that is the payment made on each period. As there is no payment made in our case,**pmt**is**0**.**C5 →**is the**fv**, which is the future value of money. Here,**fv**is the cash flow in year**1**. It is**$1000**.**PV(13%,1,0,$1000)****→**becomes**Output:**($884.96)**Explanation: $889.96**is the present value for year**1**. The**PV**function takes the cash flow as cash outflow or cash you pay out. The present value becomes negative. In cell**D5**, the negative value appears red.

- Press
**ENTER**.

Therefore, you can see the result in cell **D5**.

- Drag down the formula with the
**Fill Handle**tool.

See in the cells** D5:D9**, the present value for each year.

Calculate the total present value. To do so we will use the** Sum **function.

- Type the following formula in cell
**C12**.

`=-SUM(D5:D9)`

The** Sum **function adds the cells from **D5** to **D9**.

The present values in the cells **D5:D9 **are negative. Use a negative sign (**–**) before the **SUM **function so that the total present value of the cash flows becomes positive.

- Press
**ENTER**.

In cell **C12** you can see the Present Value.

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