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Net Present Value |
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Net Present Value |
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The net present value is the present value of the after-tax cash flow discounted to year one using the nominal discount rate, plus the after-tax cash flow in year zero:
Where,
NPV ($) |
The net present value of the project over its life. |
N |
The number of years in the project life, defined by the analysis period on the Financing page. |
Rn ($) |
The required revenue in year n, shown in the Revenues row of the cash flow. The revenue in year 1 (Rn=1) is equal to the first year PPA price. The revenue is subsequent years (R1<n≤N) is equal to the first year PPA price adjusted by the PPA escalation rate defined on the Financing page. |
CAfterTax,n ($) |
The after tax cash flow in year n, equal to State Tax Savings + Federal Tax Savings + PBI Incentives - Operating Costs - Debt Total Payment + Revenues in the project cash flow. |
dnominal |
The nominal discount rate, calculated as shown below. |
The nominal discount rate can be calculated based on the values of the real discount rate and the inflation rate on the Financing page:
dnominal = (1 + dreal)(1 + e) - 1
Where,
dnominal |
Nominal discount rate expressed as a fraction. |
dreal |
Real discount rate defined on the Financing page expressed as a fraction. |
e |
Inflation rate defined on the Financing page expressed as a fraction. |