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INPUT   DATA

♥ EXAMPLE Of Input/Output

Title

Year	Cash Stream
	(Monetary Units)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Discount Rate

%

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OUTPUT   VARIABLES   &   GRAPHS

Net Present Value (NPV)	monetary units
Internal Rate of Return	%
Payout Time	years
Payout Time (discounted)	years

Basic Cash Flow Analysis (Generic)

Determination of the Profitability Indicators and Cash Flow Streams of a development project,
given the following input: time profile of net cash flow stream.

Let us assume a time-series of net cash flow (NCF₁, NCF₂,…NCF_t…),  ,  over a planning horizon T years

where NCF_t = net cashh in year t;
     t = 1,2,3…T.

And also given:
     σ = discount rate.

The Profitability Indicators are computed from the generalized relationship:

where Net Present Value NPV = γ, when λ = T and σ = discount rate;

     Internal Rate Of Return IRR = σ, when λ = T and γ = 0;

     PayOut Time = λ, when γ = 0 and σ = 0.

BIBLIOGRAPHY

• White J.A., Agee M.H. & Case K.E.; Principles Of Engineering Economic Analysis; John Wiley & Sons, New York, 1989.
• Campbell, Jr. J.M., Campbell, Sr. J.M. & Campbell R.A.; Analysis And management Of Petroleum Investments; Publ. by CPS, Norman, Oklahoma, 1991.
• Seba R.B.; Economics Of Worldwide Petroleum Production; OGCI Publ, Tulsa, 1998.