This Python script is designed as a comprehensive tool for teaching fundamentals of investment analysis and decision-making. The script assumes all investments will be discounted to year 0 (cash_flows[0]).
Its functionalities include:
Net Present Value (NPV): Measures the profitability of an investment, considering the time value of money.
Internal Rate of Return (IRR): Determines the discount rate at which the NPV of cash flows equals zero.
Simple Payback Period (SPB): Calculates how long it takes to recover the initial investment without discounting future cash flows.
Discounted Payback Period (DPP): Accounts for the time value of money while determining the payback period.
Profitability Index (PI): Indicates the return per unit of investment.
Discounted Cash Flows: A bar chart showing the present value of each cash flow.
Cumulative Discounted Cash Flows: A line chart highlighting the break-even point.
NPV Sensitivity Analysis: A line chart that demonstrates how NPV changes with varying discount rates, helping to assess the robustness of the investment under different scenarios.
Presents all calculated metrics in a clear, tabular format.
This script helps determine whether an investment is financially viable and provides tools to analyze its sensitivity to changes in discount rate assumptions.
Utilidad con fines docentes
@author: Fernando García Bastante
Universidad de Vigo