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Trying to build a model for calculating the return for various investments and so compare various projects.
However, when I recreate the example in wikipedia I can't make it work properly.
http://en.wikipedia.org/wiki/Net_present_value
Year 1 works ok, it says £-49701, I get that, however for Year 2 it says £-32365, I get £-17800.
Following wikipedia, I am dividing -39161 by 1 + 0.10 * 2, I've tried (1+0.1)*2 and 1+(0.1*2) and while the latter works better for period 2 it's way out for period 3 and onwards.
It gets worse as time goes on.
swap * for ^
(1+0.1)^2 etc i.e to power of
drop me an email - i have a spreadsheet!
What Yeti said or use the XNPV function
swap * for ^
Oh yeah... opps 😳
Thanks fellas, mashiehood ygm thanks 🙂
What kind of investments are you evaluating where you're hurdle rate is 10%?
the 10% was just an easy calc based on the wikipedia example, still trying to find out what our WACC is...
You're finance team should be able to tel you that but there is also a way of working out. Hang on I'll get my Brealey & Myers out.....