I’m trying to calculate NPV for a Finance Lease with cash outflows of £200,000 on day 1, followed by 60 monthly cash inflows of £3,800 with interest at 5.5% compounded monthly. This always returns a negative NPV but I can’t understand why. Any help?
I also get a negative number. You have $200,000 going out immediately and it takes 4+ years to break even without interest so you are running interest on a negative value for 4+ years...in other words if you need to earn 5.5% on your money this is a bad deal.