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Thread: Solver/XNPV (2002)

20050915, 14:03 #1
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Solver/XNPV (2002)
Hello Loungers, I have been charged with do an analysis that requires me to:
1. Look at the NPV of a transaction whereby we sale 2 facilities in 1/1/06 and lease them back for 5 years.
2. Determine what the selling price on 1/1/09 must be to equate back to the NPV in number 1above  less a brokerage percentage of 4% that will be discounted back to present as well.
I know how to use solver to do all of the above except I don't know how to factor i(constraints) in a brokerage percentage of 4% into the selling price that will be discounted back.
I am attaching the worksheet. Any help/ideas are appreciated.
Thanks.
I am attaching the

20050915, 18:31 #2
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Re: Solver/XNPV (2002)
You have a lot of calculations in your spreadsheet and I don't follow all the logic.
Could you ecplain in a little more detail what you want to solve (what cell in the sheet) and what the constraints are. Coul you also explain what you mean by "discounted back to present"?
Steve

20050916, 12:35 #3
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Re: Solver/XNPV (2002)
What logic do you not follow?
What I wanted to solve is at what price would I need to sell the asset at in January of 2009 to equate back to the NPV figure already calculated. I know how to use solver to do this; however, what I did not know how to do was when I did the calculation to get the required selling price I did not know how to factor in a 4% brokerage fee which would be deducted from the gross selling price. Accordingly, I would need to sell the asset at the increased rate to get a net amount that would cause the NPV of the sale to equal the sale figure if the asset were sold in 2006.
Discounted back to present is a financial term. Put simply, if you borrow money and are required to pay a 10% interest rate, then when you look at a dollar 1 year from now you must discount it by 10% the interest rate you are required to pay. Another way of thinking about it is that money today is worth more than money tomorrow. So, what is the "Present Value" of $1000 that you will receive in 5 years. If you choose to use inflation rate as your discount rate, and the inflation rate is 4% a year then you must discount the $1000 back to it's present value using this rate. That would in essence tell you what the real value of the $1000 gift would have in today's dollars.
I hope this helps. I figured out how to get the brokerage fee in the answer but wasn't able to use Solver to include the brokerage fees.
Thanks for the help.

20050916, 14:16 #4
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Re: Solver/XNPV (2002)
I don't completely understand the question or the terms (it comes from me being a chemist and having no background in finance). I understand the terms and the concepts to some extent, but not enough to do any calculations with it. Until I understand how i would get the numbers with pen and paper, I can not know how to do it in excel. [I assume it is more than just adding 4% to the selling price (=price * 1.04)]
So I guess, unless you want to educate me in what calculations you need and how they are derived, I will step aside from this question and let someone with more "financial skills" take over.
Sorry,
Steve

20050916, 14:24 #5
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Re: Solver/XNPV (2002)
The same holds for me <img src=/S/sad.gif border=0 alt=sad width=15 height=15>

20050922, 16:53 #6
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Re: Solver/XNPV (2002)
Maybe I'm missing something, but if your future brokerage price is 4%  then should you not be working on the basis that the price you receive on 1/1/09 is 96% of the 3rd party price? If you need to arrive at the NPV of the brokerage price, then take 4/96 of the NPV.
HTHGrüße