In Vensim the NPV calculation generates a cash flow adjusted by the rate of interest. The final value should be the NPV itself. However, how to subtract the investment (year 0) value of that NVP?
Something like that: Project NVP = NPV(Project Cash Flow, Interest, 0, 1) - Initial Investments
Thak you in advance!
NPV Calculations at the end of a projected time
The most appropriate way of modeling financial variables in a project (or simulation an agricultural production system) would then consider stocks and flows of capital? Payments as flows to costs and sales as flows to revenue?? Somebody can point a paper with such discussion and model as a guide???
Thaks again!
Thaks again!
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Normally both the income and expenditures are included in a NPV computation. From your post, I am assuming that Initial Investment is the amount of investment that has occurred prior to the beginning of the simulation. This should then be entered as
Project NPV = NPV(Project Net Cash Flow,Interest,-Initial Investment,1)
Project Net Cash Flow = income - investment
Note that Initial Investment is in $ and may itself need to be computed by applying NPV logic to the stream of investments that have preceded the initial time.
Project NPV = NPV(Project Net Cash Flow,Interest,-Initial Investment,1)
Project Net Cash Flow = income - investment
Note that Initial Investment is in $ and may itself need to be computed by applying NPV logic to the stream of investments that have preceded the initial time.