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  • WST QuarterlyDCF NPV

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    Hugh Dunn
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    This document provides an example of calculating net present value (NPV) using a discounted cash flow (DCF) model with quarterly and annual cash flows discounted at a 10% annual rate. It shows the quarterly and annual undiscounted and discounted cash flows, sums of the discounted cash flows, and notes the effective periodic rate is needed to calculate the quarterly NPV using the annual rate.

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    This document provides an example of calculating net present value (NPV) using a discounted cash flow (DCF) model with quarterly and annual cash flows discounted at a 10% annual rate. It shows the quarterly and annual undiscounted and discounted cash flows, sums of the discounted cash flows, and notes the effective periodic rate is needed to calculate the quarterly NPV using the annual rate.

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    Attribution Non-Commercial (BY-NC)
    Download as XLS, PDF, TXT or read online from Scribd
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    8 views1 page

    WST QuarterlyDCF NPV

    Uploaded by

    Hugh Dunn
    This document provides an example of calculating net present value (NPV) using a discounted cash flow (DCF) model with quarterly and annual cash flows discounted at a 10% annual rate. It shows the quarterly and annual undiscounted and discounted cash flows, sums of the discounted cash flows, and notes the effective periodic rate is needed to calculate the quarterly NPV using the annual rate.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLS, PDF, TXT or read online from Scribd
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    of 1

    Wall St.

    Training
    Quarterly DCF NPV Formula

    Full Year Rate 10.0%


    Effective Periodic Rate 2.4% see below note

    Quarterly Q1 Q2 Q3 Q4
    Undiscounted Cash Flows $ 10.0 $ 10.0 $ 10.0 $ 10.0
    PV Factor (Quarterly) 0.9765 0.9535 0.9310 0.9091
    Discounted Cash Flows $ 9.765 $ 9.535 $ 9.310 $ 9.091
    Sum of DCF $ 37.7002
    NPV Formula $ 37.7002 requires effective periodic rate

    Annual $ 40.0
    Discounting $ 36.3636
    NPV Formula $ 36.3636

    Don't forget, to solve for effective periodic rate (quarterly in this case):
    (1+r)4 - 1 =10% solve for r => r = (1+10%)4 -1

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