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  3. Introduction to Financial Concepts in Python

Exercise

Two project with different lifespans

The board of the company has decided to go a different direction, involving slightly shorter term projects and lower initial investments.

Your project managers have come up with two new ideas, and projected the cash flows for each of the proposals.

Project 1 has a lifespan of 8 years, but Project 2 only has a lifespan of 7 years. Project 1 requires an initial investment of $700,000, but Project 2 only requires $400,000.

The cash flow projections for both projects are as follows:

Year Project 1 Project 2
1 -$700 (initial investment) -$400 (initial investment)
2 $100 (cash flow) $50 (cash flow)
3 $150 $100
4 $200 $150
5 $250 $200
6 $300 $250
7 $350 $300
8 $400 N / A

Instructions

100 XP
  • Create a variable cf_project_1 and set it equal to a numpy array of the projected cash flows for Project 1.
  • Repeat the process for Project 2, setting it equal to cf_project_2.
  • Scale the original values by 1000x, i.e. multiply the original arrays by 1000.