Time for action – calculating the net present value

We will calculate the net present value for a random generated cash flow series:

  1. Generate five random values for the cash flow series. Insert -100 as the start value:
    cashflows = np.random.randint(100, size=5)
cashflows = np.insert(cashflows, 0, -100)
print("Cashflows", cashflows)

    The cash flows would be as follows:

    Cashflows [-100   38   48   90   17   36]
  2. Call the npv() function to calculate the net present value from the cash flow series we generated in the previous step. Use a rate of 3 percent:
    print("Net present value", np.npv(0.03, cashflows))

    The net present value:

    Net present value 107.435682443

What just happened?

We computed the net present value from a random generated cash flow series with the NumPy npv() function (see netpresentvalue.py):

from __future__ import print_function
import numpy as np

cashflows = np.random.randint(100, size=5)
cashflows = np.insert(cashflows, 0, -100)
print("Cashflows", cashflows)

print("Net present value", np.npv(0.03, cashflows))
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