NPV Calculations at the end of a projected time

[geamaro]

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!

[LAUJJL]

You must put the initial investment into a stock, so that its value will be conserved until you want to stubstract it from the NPV itself. You can use too the sample if true function.
Regards.
JJ

[geamaro]

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!

[bob@vensim.com]

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.

[geamaro]

Thank you both, JJ and Bob...