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Discounted Cash Flow Analysis
Discounted Cash Flow Analysis
Discounted Cash Flow Analysis
Discounted Cash Flow Analysis
Net Present Value
Net Present Value
Net Present Value
Net Present Value
NPV
= net present value of a discounted cash flow.
= cash flow at period
CF
j
CF
NPV
CF
0
1 (
Internal Rate of Return
Internal Rate of Return
Internal Rate of Return
Internal Rate of Return
n
= number of cash flows
CF
= cash flow at period
j
IRR
= Internal Rate of Return
k
1
CF
0
j
j
1
Calendar
Calendar
Calendar
Calendar
Actual Day Basis
Actual Day Basis
Actual Day Basis
Actual Day Basis
DYS = f(
DT
DT
) – f(
2
where
DT
yyyy
f(
) = 365 (
) + 31 (
and
2
mm
for
x
= 0
z
= (
yyyy
) – 1
mm
for
> 2
x
mm
= INTG (0.4
z
yyyy
= (
)
INTG = Integer portion.
Note:
Note:
Note:
Note:
Additional tests are performed in order to ensure that the century (but
not millennium) years are not considered leap years.
30/360 Day Basis
30/360 Day Basis
30/360 Day Basis
30/360 Day Basis
DAYS
DT
DT
= f(
) – f(
2
DT
yyyy
f(
) = 360 (
) + 30
DT
for f(
)
1
dd
if
= 31 then
1
dd
if
31 then
1
for f(
DT
)
2
dd
if
= 31 and
2
dd
if
= 31 and
2
dd
if
< 31 then
2
j
.
CF
1
2
...
1
2
i
)
i
1 (
)
j
.
n
IRR
1 (
)
j
IRR
1 (
IRR
)
1
mm
dd
– 1) +
+ INTG (
+ 2.3)
)
1
mm
z
+
z
= 30
z
dd
=
1
dd
= 30 or 31 then
1
dd
z
dd
< 30 then
=
1
z
dd
=
2
Appendix D: Formulas Used
Appendix D:
Formulas Used
Appendix D:
Appendix D:
Formulas Used
Formulas Used
CF
n
n
i
1 (
)
nq
CF
)
q
j
0
z
x
/4) –
z
= 30
2
187
187
187
187
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