e3value user manual, first release

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

Figure 7.1:A time series for a Railway company.

Figure 7.1 gives an example of a time series.

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