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06 Calculating NPV Shell

This document contains a calculation of net present value (NPV) that is sensitive to changes in input parameters. It models cash flows from a development project over 20 years that include an initial cost and increasing gross margins for the first 8 years, followed by decreases. The NPV calculation is shown to be sensitive to the number of years of increasing margins and the rates of increase in early years.

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Syed Tabrez
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© © All Rights Reserved
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Download as XLSX, PDF, TXT or read online on Scribd
93 views

06 Calculating NPV Shell

This document contains a calculation of net present value (NPV) that is sensitive to changes in input parameters. It models cash flows from a development project over 20 years that include an initial cost and increasing gross margins for the first 8 years, followed by decreases. The NPV calculation is shown to be sensitive to the number of years of increasing margins and the rates of increase in early years.

Uploaded by

Syed Tabrez
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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A B C D E F G H I J

1 Calculating NPV at Acron Range names used:


2
3 Inputs
4 Development cost 9.3
5 Gross margin year 1 1.2
6 Rate of increase 10%
7 Increase through year 8
8 Rate of decrease 5%
9 Discount rate 12%
10
11 Cash flows Sensitivity to years of increase (cell B7)
12 End of year Gross margin
13 1 3
14 2 4
15 3 5
16 4 6
17 5 7
18 6 8
19 7 9
20 8 10
21 9
22 10 Sensitivity to rate of increase in early years (cell B6) and years of increase (cell B7)
23 11 5% 6% 7% 8% 9% 10%
24 12 3
25 13 4
26 14 5
27 15 6
28 16 7
29 17 8
30 18 9
31 19 10
32 20
33
34 NPV

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