netPresentValue¶

Evaluates the net present value of a stream of unequal periodic cash flows, which are subject to a given discount rate.

Synopsis¶

netPresentValue (rate, values)

Required Arguments¶

float rate (Input): Interest rate per period.
float values[] (Input): Array of size count of equally-spaced cash flows.

Return Value¶

The net present value of an investment. If no result can be computed, NaN is returned.

Description¶

Function netPresentValue computes the net present value of an investment. Net present value is the current value of a stream of payments, after discounting the payments using some interest rate.

It is found by solving the following:

\[\sum_{i=1}^{\mathit{count}} \frac{\mathit{value}_i}{(1+\mathit{rate})^i}\]

where $value_i$= the i-th cash flow.

Example¶

In this example, netPresentValue computes the net present value of a $10 million prize paid in 20 years ($500,000 per year) with an annual interest rate of 6%.

from __future__ import print_function
from numpy import *
from pyimsl.math.netPresentValue import netPresentValue

rate = 0.06
count = 20
value = empty((20), dtype='double')

for i in range(0, count):
    value[i] = 500000.

net_present_value = netPresentValue(rate, value)
print("The net present value of the $10 million prize is $%.2f."
      % (net_present_value))

Output¶

The net present value of the $10 million prize is $5734960.61.