PVCon (NPVDate, DisAER, Start, Finish, AnnualRate, [DayCount], [CashBasis], [DayCountDisc], [PrdsDisc])
Present Value of a Con Function
This function calculates the Net Present Value of the constant rate Con function, without having to do the individual cell calculations, which are done internally within the function.
###### General

In Projections NPV functions and some of Real Estate Valuation functions there are two sets of DayCount parameters, instead of the usual one:

• There is the DayCount/CashBasis combination, which describes when payments are made in the cashflow to be NPV"d. We need CashBasis because to get an NPV we need cash flow not accruals, and therefore the Periods is called CashBasis in this case.
• There is an extra set of daycount variables, DayCountDisc/PrdsDisc which describe how you would like the time to be measured between the NPV date and the time of each cash flow. Because an Annual Discount Rate is used, ØDiscountRateAERØ, this extra set is used to determine the number of years between the two points, just like DiffY.
In a great many cases all 4 parameters can be defaulted just by omitting them, in which case the defaults are (as usual):
• For distributing the cashflow, DayCount would be ACTM/12 and CashBasis would be Quarterly in Advance (Jan 01 etc)
• For discounting the cashflow DayCountDisc would be ACTM/12 DayCount, and ØPeriodsDiscØ is not used.
In designing these functions, it was considered that 4 variables to describe DayCount was unfortunate in that it asked the user a lot of questions. However, it is necessary to have all four (even if they are defaulted) because the two uses of DayCount they are describing are quite different - one relating to the specification of cash flow itself, and the other relating to how that cashflow is discounted.

These functions are essentially combinations of the the underlying projections function (eg PVCon, PVUniSpread) and the discounting function PVT, both of which require DayCount variables for their own different purposes.

A common misconception is to think that whilst the Daycount variables for the cashflows are needed (DayCount/CashBasis), the other, discounting set are superfluous. Whilst you can let them default, in which case the default daycount method is used, you should not forget them because they determine the length of time that the cash flows are to be discounted. Excels NPVX function, for example, uses ACT/365 (with no choice of alternatives) which is really not very suitable for periods of time longer than a year and would lead to errors over long periods. Business Functions gives you the choice of daycount method because it can really make a difference.

Tip: When you have a large number of optional variables like in projections NPV functions you may want to default some but not others. Simply leaving a blank (ie nothing) inbetween the the commas of the variable you want defaulted will signal a missing value within the function and trigger the default for that variable.

###### Example
PVCon.xls

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