Net Present Value (NPV) On Python Using Numpy
Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. NPV is used in capital budgeting and investment planning. The NPV Rule is:- If NPV > 0 Then the project is Accepted If NPV < 0 Then the project is Rejected The formula for calculating NPV is - = net present value = net cash flow at time t = discount rate = time of the cash flow This is how NPV is calculated manually with the generic formula, now we are going to use NumPy for calculating the NPV of a project. Here is an example. The initial investment is $100. The cash inflows in the next five years are $50, $60, $70, $100, and $20, starting from year one. If the discount rate is 11.2%, what is the project's NPV value? #import Numpy import numpy as np #Put/define values in the cashflows & Interestrate. CF0 =...