Operation Manual

Appendix E: Formulas Used 187
Discounted Cash Flow Analysis
Net Present Value
NPV =
Internal Rate of Return
0 =
Calendar
Actual Day Basis
∆DYS = f(DT
2
) – f(DT
1
)
where
f(DT) = 365 (yyyy) + 31 (mm – 1) + dd + INTG (z/4) – x
and
for mm ≤ 2
x = 0
z = (yyyy) – 1
for mm > 2
x = INTG (0.4mm + 2.3)
z = (yyyy)
INTG = Integer portion.
NPV = net present value of a discounted cash flow.
CF
j
= cash flow at period j.
n = number of cash flows
CF
j
= cash flow at period j.
IRR = Internal Rate of Return
CF
0
CF
1
1 i+()
1
------------------
CF
2
1 i+()
2
------------------ …
CF
n
1 i+()
n
------------------++++
CF
j
j
1=
k
∑
11IRR+()
n
j
–
–
IRR
---------------------------------------
1 IRR+()
nq
qj<
∑
–
⋅⋅ CF
0
+