Thanks, joeu2004. Not only is the first value discounted, but each value is
successively discounted for an additional year. The second value is
discounted for two years (or periods). If the user intends that the first
two values should both be discounted for one year, then the NPV function will
not do this. The help screen gives the impression that the first two values
would both be discounted for one year, with the third value then discounted
for two years. This is not what it does, though.

" wrote:

Johanna wrote:
But NPV( .1, -10000, 3000) would be treated as negative cash flow of 10,000
in the first year and a 3,000 return the second year, if I have read this
correctly, not as was explained in ex. 1.

Your understanding is correct. The key is to recognize that Excel
discounts the first value as well as the others, as you explained. So
if your "initial" cash flow should not be discounted, do not include in
the NPV() function. Your example becomes:

=-10000 + NPV(10%,3000)

Or equivalently:

=NPV(10%,3000) - 10000