Example: Net Present Value of an Investment
A lady wins a $10 million lottery. The money is to be paid out at the end of each year in $500,000 payments for 20 years. The current treasury bill rate of 6% is used as the discount rate. Here, the net present value of her prize is computed.
import com.imsl.finance.*;
import java.text.NumberFormat;
public class npvEx1 {
public static void main(String args[]) {
double rate = 0.06;
double[] value = new double[20];
for (int i = 0; i < 20; i++) value[i] = 500000.;
double npv = Finance.npv(rate, value);
System.out.println("The net present value of the $10 million " +
"prize is " + NumberFormat.getCurrencyInstance().format(npv));
}
}
Output
The net present value of the $10 million prize is $5,734,960.61
Link to Java source.