1. Solution of PV
All right, so let's take a quick look at this PV tab here.
The first thing that we wanna highlight is if we look in the
cell that says year zero and we hit F2, you can see that
there's just a zero in that cell that's been formatted to show up
as year zero. If we look in the next cell, we're just adding
one to it, so these are really numbers all the way across here
that we're gonna be able to use actually in our formula down here.
So for the formula here, let's type an equal sign, and we're gonna
take the undiscounted cash flow here, and we're gonna divide it by and
then open the bracket one plus the discount rate, so let's go down
here, select that cell, we're gonna tap F4 just to lock that one
in place, and we're gonna close the bracket and put it now to
the power of the zero, which is right up there, and we can
hit Enter. So this has come out actually as expected, 'cause we can
see here, assume year zero is the current date for the net present
value calculation, so the minus 200 million here has not been discounted,
which is what we would expect. All we need to do now is
from this cell, we're gonna hold down the shift key and highlight across
and now hit Ctrl+R, which is a fill right, to copy this formula
all the way across, and we've got a checkbox here showing that that
is correct for that line. Now let's take a peak in the cell
rate here tap F2, and we can see that what we're doing is
we're taking that $50 million cash flow and that we're dividing it by
one plus 15% to the power of 10. We're getting the 10 from
up here, so it's discounting it back 10 years. All we need to
do down here now in order to get the NPV is put in
a SUM function, and we're simply gonna sum up all of these discounted
cash flows like this, and we should get this figure, and in fact,
we have a check box here and 100%
here showing that we're all complete. Great work.
2. Let's practice!