How would I get present Value of a liftime income

[M Wilson]

How would I get present Value of a liftime income IE
Assuming 51years, 2% Inflation, 5% Assumed rate

Known=93,800 present cash flo
Known=2% on cash flow increase per yea
Known=5% anual Rate of return on investmen
Answer=2,534,442 would be the investment
Looking for the Excel Formula

 

[Vasant Nanavati]

If I understand your problem correctly:

=NPV(0.05,93800*(1.02^(ROW(1:51))))

entered as an array formula with <Ctrl> <Shift> <Enter>.

However, this yields $2,462,029 as the answer.

 

[m wilson]

First thenks for your repl
I tryed this by copying and pasting but I get an answer of 91,120.0

 

[Vasant Nanavati]

Enter it as an array formula with <Ctrl> <Shift> <Enter> instead of just
<Enter>. To get your desired answer, change the formula as follows:

=93800+NPV(0.05,93800*(1.02^(ROW(1:50))))

since your problem assumes the first cash flow installment to be at the
beginning of the period.

 

[Norman Harker]

Hi!

As an alternative to the NPV array formula approach:

=((1-((1+2%)/(1+5%))^51)/(1-(1+2%)/(1+5%)))*93800
Returns: 2534442.1139319


--
Regards
Norman Harker MVP (Excel)
Sydney, Australia
(e-mail address removed)

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