NPV without an outflow
I am building a model consisting of future variable monthly cash outflows without any cash inflows.
I need to calculate the NPV of that in order to convert that into a liability using the variable cash outflows as down payments..
The NPV formula require cash in and cash out.
What are your suggestions?
It is possible to calculate the NPV as per your table.
NPV can work with with data whose source is either dimensioned by time period or a transactions list.
I will outline both approaches;
Cashflows are laid out using time dimension.
Time dimension has been removed and a transaction list added.
This is the result;
The difference in values is due to the time calculation taking the full model calander and discounting over the full 3 years. The no time calculation only calculates for the values and dates presented and will stop discounting after the final transaction.1
In Our April Group Event we discussed how NPV can be calculated without Anaplan timescale. Here is the link.
Hope this helps
I would suggest that you come up with a mock up in excel, and share the screen shot here.
5% Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Monthly 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 Variable 500 500 End of Contract 2000 1000 1000 1000 1000 1000 1500 1000 1000 1000 1000 1000 1500 1000 3000 NPV $16,422.300
Have you given the NPV formula a try?
I used it but is concerned about the following statement:
NPV(d, c, [m, t]) where
- c: Number: Cash flow. Must have at least one negative and one positive value
The cashflow does not have at least one negative. Does this have an impact on the answer?
Looking back at your example, how did you arrive at 16,422.3
When i tried to do a mockup in Excel, i arrived at 11,560.3
Please note that i moved 2000 to Feb21 to be added with the 1000 from Feb21.