Johanna wrote:
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.

And that is not what the Help page says, as I read it.

What in the Help page "gives the impression" (to you) that the first
two values are discounted over the same amount time, namely one year?

According to the Help page, the NPV() cash flows are labeled value1,
value2, etc. And the Help page shows how NPV is computed, which I will
write stylistically as: SUM(value[i]/(1+rate)^i, i=1,n). That expands
to:

value[1]/(1+rate)^1 + value[2]/(1+rate)^2 + value[3]/(1+rate)^3 +....

Clearly, value1 is discounted for one period and value2 is discounted
for two periods, not for the same period of one year.

As an aside, I also want to note (primarily to others) that the Help
page also clearly states: "If your first cash flow occurs at the
beginning of the first period, the first value must be added to the NPV
result, not included in the values arguments". I explained that
previously, but I did not realize that the Help page also explains it.