Home 
Search 
Today's Posts 
#1




How to calculate NPV of an infinite series?
I have a series of cashflows, forecast to grow at say 2% each year and
go on indefinitely. Is there a formula or function I can use to get the value of the maximum net present value of this series? The only way I can find so far is to model it for 100's of periods, use the NPV function for each year in turn, then see at what year the NPV stops changing... must be a better way surely? 
#2




Say D is your discount rate, CF the annual constant cash flow. (note that D
must be above 2% to estimate an "infinite" NPV) NPV = Sum CF* ((1+2%)/(1+D))^N When N is infinite, after simplification, NPV = CF * 1 / (1  r) where r = (1+2%)/(1+D)  A+ V. "Mike" wrote: I have a series of cashflows, forecast to grow at say 2% each year and go on indefinitely. Is there a formula or function I can use to get the value of the maximum net present value of this series? The only way I can find so far is to model it for 100's of periods, use the NPV function for each year in turn, then see at what year the NPV stops changing... must be a better way surely? 
#3




Suppose you start with a value of "s" that grows by a factor of g, and r is
discount rate. then NPV as the time period tends toward infinity is: NPV = (g*s) / (rg) For your example, g=1.02, and r=1.08 HTH  Dana DeLouis Win XP & Office 2003 "Mike" wrote in message ups.com... I have a series of cashflows, forecast to grow at say 2% each year and go on indefinitely. Is there a formula or function I can use to get the value of the maximum net present value of this series? The only way I can find so far is to model it for 100's of periods, use the NPV function for each year in turn, then see at what year the NPV stops changing... must be a better way surely? 
Reply 
Thread Tools  Search this Thread 
Display Modes  


Similar Threads  
Thread  Forum  
Quasi Transpose / Stacking Columns  Excel Worksheet Functions  
how do i calculate CAGR for a series of years of revenues?  Excel Worksheet Functions  
How to change Series order in a Combination Chart?  Charts and Charting in Excel  
How to change Series Order in a Combination Chart?  Excel Discussion (Misc queries)  
series graph  one series being added to another series  Charts and Charting in Excel 