Net Present Value - Have I Gone Wrong

[rab.s]

I am currently calculating a net present value for an essay. When dealing with a negative cash-flow (investment) over a period of several years at the start and end of a project - Is it discounted at the same rate?

Basically does this look right?
Time Cash-flow PV
£000,000’s Calculation of PV £000,000’s
Immediately - 2015 (65.0) (65)/(1+0.2)0 (65)
1 Years Time - 2016 (110.0) (110)/(1+0.2)1 (91.6)
2 Years Time - 2017 (175.0) (175)/(1+0.2)2 (121.5)
3 Years Time - 2018 (327.0) (327)/(1+0.2)3 (189.3)
4 Years Time - 2019 320.75 320.75/(1+0.2)4 154.6
5 Years Time - 2020 320.75 320.75/(1+0.2)5 129.0
6 Years Time - 2021 320.75 320.75/(1+0.2)6 107.5
7 Years Time - 2022 320.75 320.75/(1+0.2)7 89.5
8 Years Time - 2023 320.75 320.75/(1+0.2)8 74.7
9 Years Time – 2024 320.75 320.75/(1+0.2)9 62.2
10 Years Time - 2025 (62.0) (62)/(1+0.2)10 (10.0)
11 Years Time - 2026 (64.0) (64)/(1+0.2)11 (8.6)

Net Present Value 131.5


Any help appreciated. Thanks.

Edited by rab.s on Friday 6th June 09:22

[Shaoxter]

rab.s said:

I am currently calculating a net present value for an essay. When dealing with a negative cash-flow (investment) over a period of several years at the start and end of a project - Is it discounted at the same rate?

Yes. Why wouldn't it be?

[rab.s]

Thanks, was doubting my own thinking - I have an engineering background, economics is a new concept to me...

[LooneyTunes]

rab.s said:

I have an engineering background, economics is a new concept to me...

In that case, it might be worth considering which cash flows have the greatest impact on the NPV. Hint: decommissioning costs can be notoriously difficult to accurately predict - does it matter if you're 50 - 100% out?