Problem 1469. Net Present Value of a Stream of Cash Flows

Created by Mehmet OZC

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<div style = "text-align: start; line-height: 20.4333px; min-height: 0px; white-space: normal; color: rgb(0, 0, 0); font-family: Menlo, Monaco, Consolas, monospace; font-style: normal; font-size: 14px; font-weight: 400; text-decoration: rgb(0, 0, 0); white-space: normal; "><div style="block-size: 225.167px; display: block; min-width: 0px; padding-block-start: 0px; padding-top: 0px; perspective-origin: 407px 112.583px; transform-origin: 407px 112.583px; vertical-align: baseline; "><div style="block-size: 21px; font-family: Helvetica, Arial, sans-serif; line-height: 21px; margin-block-end: 9px; margin-block-start: 2px; margin-bottom: 9px; margin-inline-end: 10px; margin-inline-start: 4px; margin-left: 4px; margin-right: 10px; margin-top: 2px; perspective-origin: 384px 10.5px; text-align: left; transform-origin: 384px 10.5px; white-space: pre-wrap; margin-left: 4px; margin-top: 2px; margin-bottom: 9px; margin-right: 10px; "><span style="block-size: auto; display: inline; margin-block-end: 0px; margin-block-start: 0px; margin-bottom: 0px; margin-inline-end: 0px; margin-inline-start: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; perspective-origin: 29.5px 8px; transform-origin: 29.5px 8px; unicode-bidi: normal; "><span style="">Calculate</span></span><span style="block-size: auto; display: inline; margin-block-end: 0px; margin-block-start: 0px; margin-bottom: 0px; margin-inline-end: 0px; margin-inline-start: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; perspective-origin: 2px 8px; transform-origin: 2px 8px; unicode-bidi: normal; "><span style=""> </span></span><a target='_blank' href = "https://en.wikipedia.org/wiki/Present_value"><span style=""><span style="">the net present value of a future cash flow</span></span></a><span style="block-size: auto; display: inline; margin-block-end: 0px; margin-block-start: 0px; margin-bottom: 0px; margin-inline-end: 0px; margin-inline-start: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; perspective-origin: 42.5px 8px; transform-origin: 42.5px 8px; unicode-bidi: normal; "><span style=""> vector given;</span></span></div><ul style="block-size: 40.8667px; counter-reset: list-item 0; font-family: Helvetica, Arial, sans-serif; list-style-type: square; margin-block-end: 20px; margin-block-start: 10px; margin-bottom: 20px; margin-top: 10px; perspective-origin: 391px 20.4333px; transform-origin: 391px 20.4333px; margin-top: 10px; margin-bottom: 20px; "><li style="block-size: 20.4333px; counter-reset: none; display: list-item; margin-block-end: 0px; margin-block-start: 0px; margin-bottom: 0px; margin-inline-start: 56px; margin-left: 56px; margin-top: 0px; perspective-origin: 363px 10.2167px; text-align: left; transform-origin: 363px 10.2167px; white-space: pre-wrap; margin-left: 56px; "><span style="block-size: auto; display: inline; margin-inline-start: 0px; margin-left: 0px; perspective-origin: 96.5px 8px; transform-origin: 96.5px 8px; unicode-bidi: normal; "><span style="">future cash flow vector (F) and</span></span></li><li style="block-size: 20.4333px; counter-reset: none; display: list-item; margin-block-end: 0px; margin-block-start: 0px; margin-bottom: 0px; margin-inline-start: 56px; margin-left: 56px; margin-top: 0px; perspective-origin: 363px 10.2167px; text-align: left; transform-origin: 363px 10.2167px; white-space: pre-wrap; margin-left: 56px; "><span style="block-size: auto; display: inline; margin-inline-start: 0px; margin-left: 0px; perspective-origin: 46.5px 8px; transform-origin: 46.5px 8px; unicode-bidi: normal; "><span style="">interest rate (i)</span></span></li></ul><div style="block-size: 21px; font-family: Helvetica, Arial, sans-serif; line-height: 21px; margin-block-end: 9px; margin-block-start: 2px; margin-bottom: 9px; margin-inline-end: 10px; margin-inline-start: 4px; margin-left: 4px; margin-right: 10px; margin-top: 2px; perspective-origin: 384px 10.5px; text-align: left; transform-origin: 384px 10.5px; white-space: pre-wrap; margin-left: 4px; margin-top: 2px; margin-bottom: 9px; margin-right: 10px; "><span style="block-size: auto; display: inline; margin-block-end: 0px; margin-block-start: 0px; margin-bottom: 0px; margin-inline-end: 0px; margin-inline-start: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; perspective-origin: 26.5px 8px; transform-origin: 26.5px 8px; unicode-bidi: normal; "><span style="">assume;</span></span></div><ul style="block-size: 61.3px; counter-reset: list-item 0; font-family: Helvetica, Arial, sans-serif; list-style-type: square; margin-block-end: 20px; margin-block-start: 10px; margin-bottom: 20px; margin-top: 10px; perspective-origin: 391px 30.65px; transform-origin: 391px 30.65px; margin-top: 10px; margin-bottom: 20px; "><li style="block-size: 20.4333px; counter-reset: none; display: list-item; margin-block-end: 0px; margin-block-start: 0px; margin-bottom: 0px; margin-inline-start: 56px; margin-left: 56px; margin-top: 0px; perspective-origin: 363px 10.2167px; text-align: left; transform-origin: 363px 10.2167px; white-space: pre-wrap; margin-left: 56px; "><span style="block-size: auto; display: inline; margin-inline-start: 0px; margin-left: 0px; perspective-origin: 137px 8px; transform-origin: 137px 8px; unicode-bidi: normal; "><span style="">all flows generated at the end of the period.</span></span></li><li style="block-size: 20.4333px; counter-reset: none; display: list-item; margin-block-end: 0px; margin-block-start: 0px; margin-bottom: 0px; margin-inline-start: 56px; margin-left: 56px; margin-top: 0px; perspective-origin: 363px 10.2167px; text-align: left; transform-origin: 363px 10.2167px; white-space: pre-wrap; margin-left: 56px; "><span style="block-size: auto; display: inline; margin-inline-start: 0px; margin-left: 0px; perspective-origin: 121px 8px; transform-origin: 121px 8px; unicode-bidi: normal; "><span style="">interest rate is same across the period</span></span></li><li style="block-size: 20.4333px; counter-reset: none; display: list-item; margin-block-end: 0px; margin-block-start: 0px; margin-bottom: 0px; margin-inline-start: 56px; margin-left: 56px; margin-top: 0px; perspective-origin: 363px 10.2167px; text-align: left; transform-origin: 363px 10.2167px; white-space: pre-wrap; margin-left: 56px; "><span style="block-size: auto; display: inline; margin-inline-start: 0px; margin-left: 0px; perspective-origin: 75.5px 8px; transform-origin: 75.5px 8px; unicode-bidi: normal; "><span style="">periods are consecutive</span></span></li></ul><div style="block-size: 21px; font-family: Helvetica, Arial, sans-serif; line-height: 21px; margin-block-end: 9px; margin-block-start: 2px; margin-bottom: 9px; margin-inline-end: 10px; margin-inline-start: 4px; margin-left: 4px; margin-right: 10px; margin-top: 2px; perspective-origin: 384px 10.5px; text-align: left; transform-origin: 384px 10.5px; white-space: pre-wrap; margin-left: 4px; margin-top: 2px; margin-bottom: 9px; margin-right: 10px; "><span style="block-size: auto; display: inline; margin-block-end: 0px; margin-block-start: 0px; margin-bottom: 0px; margin-inline-end: 0px; margin-inline-start: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; perspective-origin: 154px 8px; transform-origin: 154px 8px; unicode-bidi: normal; "><span style="">Round the final value to 3 digits after the decimal</span></span></div></div></div>

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Last Solution submitted on Nov 14, 2021

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Gergely Patay on 19 Jan 2015

Rounding was not mentioned in the problem statement..

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Solution 599482

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Tim Hansen on 20 Mar 2015

Would be helpful if you change the description to say that the result should be saved to y, rounded up to 3 decimal places. Also, that the present value should be calculated with discrete compounding, and not continuously compounded.

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Problem 1469. Net Present Value of a Stream of Cash Flows

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Problem 1469. Net Present Value of a Stream of Cash Flows

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