NPV negative cash flows issue

[decafdave]

Hey,

I am calculating NPV for a land buying project. However, all the cash flows until the end (when land is sold, hopefully for profit) are negative due to property taxes. My formula is as follows: NPV(B16,E29:AC29,MAX(E32:AC32))-B11

B16=discount rate
E29:AC29 are all possible property tax cash outflows-depending on length of the project it will end before AC29 or up to.
Max E32:AC32= land sold price-for this simplicistic initial model we are assuming continued appreciation or stabilization, no declines.
-B11= the initial outflow for purchase of land that must be added into the excel

I calculate it with my financial calculator and get a different answer. Anyone have an idea?

I would appreciate any help!<input id="gwProxy" type="hidden"><!--Session data--><input *******="jsCall();" id="jsProxy" type="hidden">

 

[F&s anaylst]

can't help there but is you go to www.youtube.com and type in excelisfun (all one word) current excel message board member as both 30 videos on financial formulas

 

[blucasade]

decafdave
If B11 is your initial investment, or "IO", shouldn't that should be value1 in your NPV formula?

If

NPV = -IO + [CF1]/((1+r)^1 + ... [CFn]/(1+r)^T

For example r =12%
Assuming B11 is a negative value

Then

=NPV(12%,b11,E29:AC29,MAX(E32:AC32))


blucasade

 

[decafdave]

Oh thanks for the advice. I could slap myself now because I figured it out. I was treating the land sale as a cash inflow further than my last year and now that I have accounted for that everything's ok.
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[decafdave]

decafdave
If B11 is your initial investment, or "IO", shouldn't that should be value1 in your NPV formula?

If

NPV = -IO + [CF1]/((1+r)^1 + ... [CFn]/(1+r)^T

For example r =12%
Assuming B11 is a negative value

Then

=NPV(12%,b11,E29:AC29,MAX(E32:AC32))


blucasade

Thanks for the reply Blucascade. Unfortunately Excel doesn't calculate it correctly when done in this manner I don't think. You have to take out the outflow separately. Double check with a financial calculator but I'm 99% certain I'm correct on this (excel beginner though I am).

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[blucasade]

Ah yes, my mistake.

You could use:

=B11+NPV(12%,E29:AC29,MAX(E32:AC32))

Assuming B11 is a negative value and that AC29 does not relate to the same period as your terminal value of MAX(E32:AC32).

 

[decafdave]

Thanks for the help F&s Analyst and Blucasade.
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