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    How Much Is Next Year's Money Worth Today? Double Checking From Value Today To Next Year

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    amaresh mahapatra
    The document contains examples of calculating present value and net present value (NPV) using different interest rates. It shows how to calculate the value today of cash flows occurring in future years. It also contains an example of using the NPV function in a spreadsheet to calculate NPV and find the break-even point.

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    How Much Is Next Year's Money Worth Today? Double Checking From Value Today To Next Year

    Uploaded by

    amaresh mahapatra
    10 views7 pages
    The document contains examples of calculating present value and net present value (NPV) using different interest rates. It shows how to calculate the value today of cash flows occurring in future years. It also contains an example of using the NPV function in a spreadsheet to calculate NPV and find the break-even point.

    Original Description:

    Net Profit Value

    Original Title

    Dream Job

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    The document contains examples of calculating present value and net present value (NPV) using different interest rates. It shows how to calculate the value today of cash flows occurring in future years. It also contains an example of using the NPV function in a spreadsheet to calculate NPV and find the break-even point.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    10 views7 pages

    How Much Is Next Year's Money Worth Today? Double Checking From Value Today To Next Year

    Uploaded by

    amaresh mahapatra
    The document contains examples of calculating present value and net present value (NPV) using different interest rates. It shows how to calculate the value today of cash flows occurring in future years. It also contains an example of using the NPV function in a spreadsheet to calculate NPV and find the break-even point.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 7

    How much is next year's money worth today?

    Double Checking from Value t

    Interest Rate Value in +1 year Value today Interest


    5.0% $ 1,000 $ 952 $ 48
    12.0% $ 645 $ 576 $ 69
    17.0% $ 1,700 $ 1,453 $ 247
    13.5% $ 16,000,000 $ 14,096,916 $ 1,903,084
    Checking from Value today to next year

    Today Next year


    $ 952 $ 1,000
    $ 576 $ 645
    $ 1,453 $ 1,700
    $ 14,096,916 $ 16,000,000
    Calculating Net Present Value of cashflow step by step

    Year 1 2 3 4
    Cost ($800,000)
    Benefit $200,000 $200,000 $200,000
    Net ($800,000) $200,000 $200,000 $200,000

    Interest Rate 10%

    Present Value Year 3 as year 2 Year 4 as year 3 Year 5 as year 4


    Year 1 ($800,000)
    Year 2 $181,818
    Year 3 $165,289 $181,818
    Year 4 $150,263 $165,289 $181,818
    Year 5 $136,603 $150,263 $165,289 $181,818

    NPV ($166,027)

    Cross check using spreadsheet NPV function

    NPV ($166,027)
    5

    $200,000
    $200,000
    Calculating break-even using NPV function

    Year 1 2 3 4
    Cost ($800,000)
    Benefit $200,000 $200,000 $200,000
    Net ($800,000) $200,000 $200,000 $200,000

    Interest Rate 10%

    NPV (£41,843)

    Year 1 2 3 4
    Cost ($800,000)
    Benefit $200,000 $200,000 $200,000
    Net ($800,000) $200,000 $200,000 $200,000

    Interest Rate 10%

    NPV $71,052
    5 6

    $200,000 $200,000
    $200,000 $200,000

    5 6 7

    $200,000 $200,000 $200,000


    $200,000 $200,000 $200,000
    NPV Exercise 1

    Year 1 2 3 4 5
    Cost ($500,000)
    Benefit $60,000 $120,000 $150,000 $300,000
    Net ($500,000) $60,000 $120,000 $150,000 $300,000

    Interest Rate 10%

    NPV
    calculation below to show how($28,680)
    value Present Value of each cashflow reduces, as it
    gets further away

    Present Value Year 3 as year Year 4 as year Year 5 as year 4


    Year 1 ($500,000)
    Year 2 $54,545
    Year 3 $99,174 $109,091
    Year 4 $112,697 $123,967 $136,364
    Year 5 $204,904 $225,394 $247,934 $272,727

    NPV ($28,680)

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