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FT_NETPV()
Calculate net present value
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Syntax
FT_NETPV( <nInitialInvestment>, <nInterestRate>, <aCashFlow> ;
[, <nNoOfCashFlows> ] ) -> nNetPV
Arguments
<nInitialInvestment> is the amount of cash invested for purposes
of generating the cash flows.
<nInterestRate> is the annual interest rate used to discount
expected cash flows (10.5% = 10.5, not .105).
<aCashFlow> is an array of the expected cash receipts each year.
<nNoOfCashFlows> is the number of years cash flows are expected
(optional, Len( aCashFlow ) ).
Returns
The difference between the initial investment and the discounted
cash flow in dollars.
Description
This function calculates the net present value, the difference
between the cost of an initial investment and the present value
of the expected cash flow(s) from the investment. The present
value of the expected cashflow(s) is calculated at the specified
interest rate, which is often referred to as the "cost of capital".
This function can be used to evaluate alternative investments.
The larger the NPV, the more profitable the investment. See
also the FutureValue and PresentValue for further explanations.
The formula to calculate the net present value is:
NetPresentValue = SUM(CashFlow[i] / ((1 + InterestRate) ** i))
FOR i = 1 TO NoOfCashFlows
Examples
nNetPresentValue := FT_NETPV(10000, 10, { 10000,15000,16000,17000 } )
Source: NETPV.PRG
Author: David Husnian
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