NPV without an outflow

Roelofg

Good morning

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?

 

ChrisAHeathcote

@Roelofg 

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;

With Time

Cashflows are laid out using time dimension.

Without Time

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.

 

 

 

Misbah

@Roelofg 

In Our April Group Event we discussed how NPV can be calculated without Anaplan timescale. Here is the link.

 

https://community.anaplan.com/t5/Modelers-Forum-India/Recording-of-Group-Event-13-04-2021/m-p/105085

 

Hope this helps

Misbah

LipChean_Soh

Hi @Roelofg 

 

I would suggest that you come up with a mock up in excel, and share the screen shot here.

 

Thanks,

LipChean

Roelofg

		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	$16,422.30

Roelofg

See below

LipChean_Soh

Hi @Roelofg 

 

Have you given the NPV formula a try?

https://help.anaplan.com/c504a4f5-5513-42e3-91cf-b34d873d18f3-NPV

 

Thanks,

LipChean

Roelofg

Hi LipChean_Soh

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?

 

Roelof

LipChean_Soh

Hi @Roelofg 

 

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.

 

Thanks,

LipChean