Chapter Contents |
Previous |
Next |
NETPV |
Category: | Financial |
Syntax | |
Details | |
Examples |
Syntax |
NETPV(r,freq,c0,c1, . . . ,cn) |
Range: | freq > 0 |
Exception: | The case freq = 0 is a flag to allow continuous discounting. |
Details |
The NETPV function returns the net present value at time 0 for the set of cash payments c0,c1, . . . ,cn, with a rate r over a specified base period of time. The argument freq>0 describes the number of payments that occur over the specified base period of time.
The net present value is given by
where
Missing values in the payments are treated as 0 values. When freq>0, the rate r is the effective rate over the specified base period. To compute with a quarterly rate (the base period is three months) of 4 percent with monthly cash payments, set freq to 3 and set r to .04.
If freq is 0, continuous discounting is assumed. The base period is the time interval between two consecutive payments, and the rate r is a nominal rate.
To compute with a nominal annual interest rate of 11 percent discounted continuously with monthly payments, set freq to 0 and set r to .11/12.
Examples |
For an initial investment of $500 that returns biannual payments of $200, $300, and $400 over the succeeding 6 years and an annual discount rate of 10 percent, the net present value of the investment can be expressed as
value=netpv(.10,.5,-500,200,300,400);
The value returned is 95.98.
Chapter Contents |
Previous |
Next |
Top of Page |
Copyright 1999 by SAS Institute Inc., Cary, NC, USA. All rights reserved.