Forum Discussion
Calculate NPV for non regular date & amount
I hope I have made it clear, and thank you in advance
hussein_elsayed wrote: ``I hope I have made it clear``
I'm afraid not. My only "understanding" of the concept of "deferred sale" is in the context of a (US) deferred sale trust (click here), which I read about only just now(!).
Read: I don't really know much about it. And your description sounds like something very different altogether. I'm not sure I understand the context that you describe.
In hindsight, my "TMI" addendum might have added to the confusion. So, I will delete it.
I believe the calculations that I provided correctly demonstrate the difference in the NPV of the two payment streams, for what it's worth.
JoeUser2004 in the real estate company we sold units with installments over many years (8 YRS), we offer an option to the customers to change the default senario and pay large amount in advance to get an discount on the total price as shown in the attached file, so i need to make sure that i calculate it in accurate way as it has afinancial impact
hussein_elsayed wrote: ``we offer an option to the customers to change the default senario and pay large amount in advance to get an discount on the total price``
I think you want to know how to calculate the equal, but irregularly-paid payment (E6) for the second option (E8:E115) that results in the same NPV (C5, E5) as the first option (C8:C115).
And I think you want to calculate the amount of or percentage difference (E117) between the sum of the cash flows (C116, E116) for the first and second options.
But before I fully explain details and the choices you might make, I need to know: is that right?
If not, forgive me for the misdirection.
[EDIT.... In hindsight, it was. Mea culpa! I've deleted the misdirected details.]
If I am right, please explain:
1. Do you want to use a monthly cash flow model, as you do in your example Excel file?
Or do you want to use the more consise cash flow model that you presented in your original posting?
2. How did you determine the annual interest rate (B5)?
It is different from the NPV discount rate (8%) in your original posting?
3. For the original payment schedule (C8:C115), how did you determine the last payment in C105 (200,438), which differs from the other equal payments (200,411) starting in C15?
4. How did you determine the value in C2 (6,903,074)? And what purpose does it serve, if any?
It is close to, but not equal to the sum of the cash flows (C116) for the first option.
First of all i would like to thank you for your quick reply, and let me to reply to the below points.
1. Do you want to use a monthly cash flow model, as you do in your example Excel file?
yes i need to use the monthly senario as there are irrigular dates in my attachment
Or do you want to use the more consise cash flow model that you presented in your original posting?
i just sent it to clarify the idea but the second attachement is what we are working with in my work and i think it has alot of mistakes that i dont understand it so i ask for the right way to calculate what the client can get when he pay a lage amount at the begining in accurat way
2. How did you determine the annual interest rate (B5)?
the annual rate are given as per the policy of my company
It is different from the NPV discount rate (8%) in your original posting?
yes
3. For the original payment schedule (C8:C115), how did you determine the last payment in C105 (200,438), which differs from the other equal payments (200,411) starting in C15?
calculated, to be equal with the total amount in C2
4. How did you determine the value in C2 (6,903,074)? And what purpose does it serve, if any?
According to the pricing list of units that we have in our company
It is close to, but not equal to the sum of the cash flows (C116) for the first option.