Net Present Value 2

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Ready to use

8 years, 11 months ago

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Julie Crowley 8 years, 7 months ago

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Julie Crowley 8 years, 11 months ago

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Julie Crowley 9 years, 1 month ago

Created this as a copy of Net Present Value 2.

Name	Status	Author	Last Modified
Net Present Value	Ready to use	Julie Crowley	07/10/2016 22:23
Net Present Value 2	Ready to use	Julie Crowley	07/10/2016 22:22
Simon's copy of Net Present Value	draft	Simon Thomas	30/05/2019 15:23
Simon's copy of Net Present Value 2	draft	Simon Thomas	30/05/2019 15:31

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Question statement

An investment of € $\var{Invest}$ invested today will give a return of € $\var{Return1}$ in $\var{n1}$ years' time and a further return of € $\var{Return2}$ in $\var{n2}$ years' time.

Give any introductory information the student needs.

			Name	Type	Generated Value

Invest	number	55200
Return1	integer	20000
perc	number	5
int	number	0.05
PV1	number	18140.59
n1	integer	2
num	number	1.1025
Return2	integer	50000
n2	integer	5
PV2	number	39176.31
NPV	number	2116.9
num2	number	1.2762815625
n		Definition of variable `n` is empty.

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Name

Data type

Value

xxxxxxxxxx
 
siground(Return1/(1+int+0.01)^n1, 3)+siground(Return2/(1+int+0.01)^n2, 3)

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Generated value: `number`

55200

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int
n1
n2
Return1
Return2

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Calculate the net present value (NPV) of the investment given that the discount rate is $\var{perc}$ % per annum.

€Unnamed gap

Advice

We wish to calculate the net present value (NPV) of an investment that will be worth € $\var{Return1}$ in $\var{n1}$ years time plus an additional € $\var{Return2}$ in $\var{n2}$ years time. Using the present value formula, the present value of the € $\var{Return1}$ is:

$P=\frac{A}{(1+i)^{n}}$

where $A$ is € $\var{Return1}$ , $n$ is $\var{n1}$ and $i$ is $\frac{\var{perc}}{100}=\var{int}$

$P1=\frac{\var{Return1}}{(1+\var{int})^{\var{n}}}$

$P1=\frac{\var{Return1}}{\var{num}}$

$P1=\var{PV1}$

Using the present value formula, the present value of the € $\var{Return2}$ is:

$P=\frac{A}{(1+i)^{n}}$

where $A$ is € $\var{Return2}$ , $n$ is $\var{n2}$ and $i$ is $\frac{\var{perc}}{100}=\var{int}$

$P2=\frac{\var{Return2}}{(1+\var{int})^{\var{n}}}$

$P2=\frac{\var{Return2}}{\var{num}}$

$P2=\var{PV2}$

The NPV of the total amount is $P1+P2-Investment=\var{PV1}+\var{PV2}-\var{INVEST}=€\var{NPV}$

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Julie Crowley 8 years, 7 months ago

Julie Crowley 8 years, 11 months ago

Julie Crowley 9 years, 1 month ago

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Net Present Value 2

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Taxonomy: mathcentre

Taxonomy: Kind of activity

Taxonomy: Context

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Julie Crowley 8 years, 7 months ago

Julie Crowley 8 years, 11 months ago

Julie Crowley 9 years, 1 month ago

Error in variable testing condition

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Generated value: number

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Generated value: `number`