Discounting cash flows

You can use numpy's net present value function numpy.npv(rate, values) to calculate the net present value of a series of cash flows. You can create these cash flows by using a numpy.array([...]) of values.

Compute the NPV of the same cash flows from the following project, but assuming different discount rates:

Year	Cash Flow
1	$100
2	$100
3	$100
4	$100
5	$100

This is a part of the course

“Introduction to Financial Concepts in Python”

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Exercise instructions

Calculate the net present value of the investment with cash_flows at a discount rate of 3% per year, and assign it to investment_1.
Repeat the process with a discount rate of 5% per year, and assign it to investment_2.
Repeat the process with a discount rate of 7% per year, and assign it to investment_3.

Hands-on interactive exercise

Have a go at this exercise by completing this sample code.

import numpy as np

# Predefined array of cash flows
cash_flows = np.array([100, 100, 100, 100, 100])

# Calculate investment_1
investment_1 = np.npv(rate=____, values=____)
print("Investment 1's net present value is $" + str(round(investment_1, 2)) + " in today's dollars")

# Calculate investment_2
investment_2 = np.npv(rate=____, values=____)
print("Investment 2's net present value is $" + str(round(investment_2, 2)) + " in today's dollars")

# Calculate investment_3
investment_3 = np.npv(rate=____, values=____)
print("Investment 3's net present value is $" + str(round(investment_3, 2)) + " in today's dollars")

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