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I have calculated the PV of a set of cashflows over a period of 10 years.

Here is the equation: YEAR/CASHFLOW

  1. 50,000
  2. 51,500
  3. 53,045
  4. 54,636
  5. 56,275
  6. 57,964
  7. 59,703
  8. 61,494
  9. 63,339
  10. 65,239

PV of the cashflows = $415,940 at a discount rate of 6%

Here's where I get confused:

Now that I know the PV, why then, if I take this amount, $415,940 and I invest it at a rate of 6% pa and each year a negative cashflow, corresponding to the table above, is paid out of the account, why does the figure at the end of year 10, not equal zero? Is that not a reverse of the PV equation?

Debbie French
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1 Answers1

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Using Maple, I get the following . . .

enter image description here

quasi
  • 58,772
  • I get the same results in Excel. If you round NPV to 415,940 and round all year end values to 2dp then there is a small negative balance (-1.30) at the end of year 10. – gandalf61 Apr 18 '18 at 11:34
  • Thank you so much, yep that worked. Im not sure what I was doing wrong, perhaps just staring at the equation for too long!! – Debbie French Apr 18 '18 at 11:41