Populate your investment assumptions

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Present Value (PV) of investment $0
PV of net revenue stream $0
PV of residual value $0
NPV (Year 0) $0
* All $ values to enter without the $ sign or commas
** All % rates to enter without the % sign and to include 2 decimals (except gearing ratio as integer)
Sector of your investment:

Size of the investment sponsor:

Credit rating of the investment:

Gearing: (debt as % of total investment, from 0 to 99)

Choose your discount rate:

Your investment stream: (no minus sign)
Outflow value in year -2 *
Outflow value in year -1 *
Outflow value in year 0 *

Your projected inflows (revenues net of cost):
Annual inflow value in $ *
First revenue in
Revenue period
Annual % net revenue growth **
Residual value in $ *

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The NPV or Net Present Value is calculated by discounting cash flows to the reference Year 0 at either the calculated WACC (Weighted Average Cost of Capital) or your choice of discount rate.

The WACC is the average of the cost of debt and cost of equity weighted by the gearing ratio.

The cost of debt is equal to the premium determined by the investment credit rating (increasing with the investment term assumed as the revenue period) added to a 2% risk free cash rate and reduced by a 30% income tax deductibility.

The cost of equity is equal to a 7% market risk premium factored by a geared beta determined from the selected sector, the sponsor size, and the gearing ratio.

The residual value is discounted from the year following the last year of the revenue period. It is not indexed by the annual % revenue growth.

The maximum revenue period is limited to 30 years as any revenue stream beyond 30 years will have a negligible impact on the NPV (revenue in year 31 is divided by about 10 with a 7.5% discount rate, that is one tenth over 30 discounted cash inflows or less than 1% of the revenue PV assuming a $0 residual value and a 0% revenue growth rate).

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