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Topic: Cashflow and TimeValue Question
Replies: 0

 Dana DeLouis Posts: 24 Registered: 11/18/12
Cashflow and TimeValue Question
Posted: Jul 1, 2013 5:41 AM

Hello. When doing Net-Present value types of problems, I seem to
occasionaly get slightly different answers when compared to a very
365 day year, yet I don't see anything in the Mathematica documentation
on this.
I've reduced the issue down to these two simple examples.

1. 3 simple daily cash flows in a row.
cf[[1,1,1]] is returning the start date, or time 0.
The days per year is a fraction, so I use Rationalize to return
the values used for easy viewing.

cf=Cashflow[{
{{2009,12,29},a},
{{2009,12,30},b},
{{2009,12,31},c}
}];

Rationalize[TimeValue[cf,r,cf[[1,1,1]]],0]

a + b/(r+1)^(1/365) + c/(r+1)^(2/365)

It appears the program uses 365 days/year also. This example would most
likely match.
We just note that the year 2009 is not a leap year.

2. However, If I change the year to 2007, which is also not a leap
year, it appears that the program is using a 366 day year. These types
use a constant 365 day year.

cf=Cashflow[{
{{2007,12,29},a},
{{2007,12,30},b},
{{2007,12,31},c}
}];

Rationalize[TimeValue[cf,r,cf[[1,1,1]]],0]

a + b/(r+1)^(1/366) + c/(r+1)^(1/183)

Note: it's using 366 day year...
{1,2}/366
{1/366,1/183}

Does anyone have any insight? I'm not sure what the standard convention is.
I just note that both years are non leap years, yet different methods of calculations.
It appears to me that the random use of 366 is causing the slightly different answers.