Question

In damodaran books, he has mentioned the time-varying discount rate, does anyone knows how to calculate NPV with time-varying discount rate using excel?

Answer 1

Let's assume that you have cash flows of $40 in year 1, $ 50 in year 2 and $ 60 in year 3 and that your discount rate is 12% in year 1, 11% in year 2 and 10% in year 3:
PV = 40/1.12 + 50/(1.12*1.11) + 60/ (1.12*1.11*1.10)

Answer 2

But can i simplified it in excel (for e.g =npv(r1,r2,value1,value2))

Answer 3

No.