How it works
The cash flow is the list of money in and out by year. Write that list first.
- Review extras, credit timing, the rate, the term window, and the leftovers.
- If any check fails, do not publish the rank.
- Write the fail in the open.
- Then fix the row and rerun.
Formula in words. No rank until extras, credits, rate, window, and leftovers are visible.
| Input | Meaning |
|---|---|
| Extras present | Yes or no |
| Credit year | Matches the deal |
| Shared rate | Yes or no |
| Shared window | Yes or no |
Worked example
Here is a teaching sample. It is not customer data and not a result from a live client.
Lease A start rent$42,000
Lease B start rent$39,060
Discount rate8%
Sample NPV A$387,344
| Metric | Lease A | Lease B |
|---|---|---|
| Start rent | $42,000 | $39,060 |
| Year-1 extras | $10,200 | $10,914 |
| Year-1 credit | $13,000 | $7,150 |
| Sample NPV | $387,344 | $375,585 |
| Year | Rent | Extras | Credit | Cash out | Value today |
|---|---|---|---|---|---|
| Year 1 | $42,000 | $10,200 | $13,000 | $39,200 | $36,296 |
| Year 2 | $43,512 | $10,506 | $0 | $54,018 | $46,312 |
| Year 3 | $45,078 | $10,821 | $0 | $55,899 | $44,374 |
| Year 4 | $46,701 | $11,146 | $0 | $57,847 | $42,519 |
| Year 5 | $48,383 | $11,480 | $0 | $59,863 | $40,742 |
| Year 6 | $49,834 | $11,824 | $0 | $61,658 | $38,855 |
| Year 7 | $51,329 | $12,179 | $0 | $63,508 | $37,056 |
| Year 8 | $52,869 | $12,544 | $0 | $65,413 | $35,341 |
| Year 9 | $54,455 | $12,920 | $0 | $67,375 | $33,704 |
| Year 10 | $56,089 | $13,308 | $0 | $69,397 | $32,144 |
| Sample NPV | — | — | — | — | $387,344 |
How to read the sample
Sample NPV for the mistake-check lease is about $387,344. A second path lands near $375,585. That gap is a talking point, not a promise.
A wrong credit year would distort this row. If one path wins only because a credit sat in the wrong year, start over.
Year notes for the mistake-check lease
- Year 1 of the mistake-check lease has rent of $42,000.
- Shared building cost is $10,200.
- A credit of $13,000 lowers the cash you pay that year.
- Cash out this year is about $39,200. A wrong credit year would distort this row.
- Later cash gets a shrink for time. At 8 percent, year 1 is worth about $36,296 today.
- Next, year 2 rent is $43,512.
- CAM, which is a shared building cost, is $10,506.
- There is no credit in this year.
- You pay about $54,018 this year after extras and credits. A missing extra would understate this row.
- Time shrinks later cash. At 8 percent, year 2 is worth about $46,312 today.
- Then year 3 rent is $45,078.
- Extras for the building come to $10,821.
- Credits skip this year.
- The net cash this year is about $55,899. A private rate change would shrink this row only.
- Waiting has a price. At 8 percent, year 3 is worth about $44,374 today.
- After that, year 4 rent is $46,701.
- The shared building cost this time is $11,146.
- No extra credit shows up this year.
- Cash out this year is about $57,847. A mixed term would add ghost years after this.
- Later cash gets a shrink for time. At 8 percent, year 4 is worth about $42,519 today.
- In year 5 of the mistake-check lease, rent is $48,383.
- Shared building cost is $11,480.
- There is no credit in this year.
- You pay about $59,863 this year after extras and credits. A leftover left unsaid would sit here in silence.
- Time shrinks later cash. At 8 percent, year 5 is worth about $40,742 today.
- Year 6 of the mistake-check lease has rent of $49,834.
- CAM, which is a shared building cost, is $11,824.
- Credits skip this year.
- The net cash this year is about $61,658. Keep this later year in the sum for the sample.
- Waiting has a price. At 8 percent, year 6 is worth about $38,855 today.
- Next, year 7 rent is $51,329.
- Extras for the building come to $12,179.
- No extra credit shows up this year.
- Cash out this year is about $63,508. The row still belongs in the sum for the long path.
- Later cash gets a shrink for time. At 8 percent, year 7 is worth about $37,056 today.
- Then year 8 rent is $52,869.
- The shared building cost this time is $12,544.
- There is no credit in this year.
- You pay about $65,413 this year after extras and credits. Keep this later year in the sum for the long path.
- Time shrinks later cash. At 8 percent, year 8 is worth about $35,341 today.
- After that, year 9 rent is $54,455.
- Shared building cost is $12,920.
- Credits skip this year.
- The net cash this year is about $67,375. The row still belongs in the sum for the long path.
- Waiting has a price. At 8 percent, year 9 is worth about $33,704 today.
- In year 10 of the mistake-check lease, rent is $56,089.
- CAM, which is a shared building cost, is $13,308.
- No extra credit shows up this year.
- Cash out this year is about $69,397. Keep this later year in the sum for the long path.
- Later cash gets a shrink for time. At 8 percent, year 10 is worth about $32,144 today.
Add those year values. The sample NPV for the mistake-check lease is about $387,344. This is a teaching sample, not a client result.
Trusted sources
These are public references. They are not endorsements and not client results.