Discounted net present cash flow computation in the time series tool

Period 0 is the time of investment and we have 0 sales. This leads to a net value flow sheet for period 0 as shown in table 7.4.

In period 1 and later, there are no investments. In period 1 there are 50,000 Travelers, who have a need to travel 10 times. For each trip, they pay f200.-. The net value sheet for period 1 is shown in table 7.5.

In period 2, the Railway company attracts more customers, so the market segment Travelers now has 60,000 actors rather than just 50,000. This results in a changed net value sheet for period 2 (table 7.6).

In period 3, the Travelers decide to travel 12 times and not just 10 times (table 7.7).

In period 4, the Railway company has increased the price of a train trip f210. Everything else staying the same in this time series, this results in a net value flow increase for the Railway company as shown in table 7.8.

The net value flow sheets for the periods of the time series in figure 7.1 are shown in tables 7.4 to 7.8.

Each time series as a whole has an interest rate that will be used in DNVF computations. Each actor and market segment can have an interest rate too, in which case the DNVF algorithm takes the interest rate for that actor or market segment.

Using an interest rate of 7%, the discounted net present cash flow of the Railway company is f381,167,241.65. If this is higher than the discounted net present value of investing f50M in risk-free state bonds, then the railway company is worth an investment of f50M. If it is not higher, then this means that the activities of the Railway company do not add any value with respect to an investment in risk-free state bonds.

Table 7.4:Net value flow sheet of period 0 of the Railway company of figure 7.1.


Interface	Port	Transfers	Transfer occurrences	Valuation	Total value transferred	Net value flow

traintrip, Money			0.00			0.00
	out: traintrip	all	0.00	0.00	0.00
	in: Money	all	0.00	200.00	0.00

Investment					50 M


total for actor						-50 M

Table 7.5:Net value flow sheet of period 1 of the Railway company of figure 7.1.


Interface	Port	Transfers	Transfer occurrences	Valuation	Total value transferred	Net value flow

rain trip, Money			500 K			100 M
	out: Train trip	all	500 K	0.00	0.00
	in: Money	all	500 K	200.00	100 M


total for actor						100 M

Table 7.6:Net value flow sheet of period 2 of the Railway company of figure 7.1.


Interface	Port	Transfers	Transfer occurrences	Valuation	Total value transferred	Net value flow

Money, Train trip			600 K			120 M
	in: Money	all	600 K	200.00	120 M
	out: traintrip	all	600 K	0.00	0.00


total for actor						120 M

Table 7.7:Net value flow sheet of period 3 of the Railway company of figure 7.1.


Interface	Port	Transfers	Transfer occurrences	Valuation	Total value transferred	Net value flow

Train trip, Money			720 K			144 M
	out: Train trip	all	720 K	0.00	0.00
	in: Money	all	720 K	200.00	144 M


total for actor						144 M

Table 7.8:Net value flow sheet of period 4 of the Railway company of figure 7.1.


Interface	Port	Transfers	Transfer occurrences	Valuation	Total value transferred	Net value flow

Money, Train trip			720 K			151.2 M
	in: Money	all	720 K	210.00	151.2 M
	out: Train trip	all	720 K	0.00	0.00


Total for actor						151.2 M

7.5 Discounted net present cash flow computation in the time series tool