e3value user manual, first release

7.2 Naive net present cash flow analysis

For one contract period, we sum all all in-going cash flows of an actor over the contract period and subtract the sum of all out-going cash flows, including investments. If we do this for all periods in a time series, the net present cash flow of a time series is

∑m
   (Revenuesp − Expensesp − Investmentsp )
p=0

where p ranges over the periods of the time series.

For example, consider table 7.1. In period 0, an investment is made and no revenues and expenses occur yet. In periods 1, 2 and 3 we have a revenues of f500 and expenses of f100 in each period. This gives a positive net cash flow of f200 at the end of the time series.

Table 7.1:Naive calculation of net cash value over a series of market scenarios.





Period

Revenues

Expenses

Investments

Total











0

1,000

-1,000






1

500

100

400






2

500

100

400






3

500

100

400











Total

200