Calculating the net present value with semi annual costs

xblaauw

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Jun 12, 2017
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1
Hey, i am a student at the university of utrecht and i have calculated the net present value of several projects successfully and have been asked to do so again. I realised that i keep rebuilding the excel sheet i use to do that for one reason, i cant find a way to add the initial investment cost after x amount of years.

Little bit of background, i often calculate the cost of investing in a certain technology. To do that i invest the cost of the machine in year 1, and calculate the value of the benefits minus the costs using the discount rate for each consecutive year after that and add them together.

The problem comes when i am trying to compare two technologies over a span of twenty years, one of them will have a lifespan of 5 years and the other 10 or something, that means after 5 years i will need to reinvest with the first option and only after 10 years with the second option. So far i have been putting these values in manually, but that method takes a tremendous amount of work (often i am comparing many different technologies at once, so this can easily become entering 500 data points manually, especially with a sensitivity analysis).

so i asked the best excel person i know how to solve this and he answered that he thought i might be able to solve it using the IF function, but i've been trying for the better part of a day and i can't figure out how to use the IF function so that it adds the investment cost to the costs of a year x amount of years since the last time. I want to be able to change x.

that way i will never have to remake this document and can continue to use it throughout my career :)
 

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