NPV Calculator

Inspectable records

Ledger state

The current ledger marks this instrument verified clean within the source-bound verification corpus.

Area

Finance, Economics & Business (educational only — never individualized investment, tax, or legal advice)

Tranche

tranche-4

Evidence ID

t4-152

Ledger rows

1

No ledger note is attached.

Review findings

The mathematical formula is correct under the stated timing and unit assumptions, but the instrument needs an explicit initial_outlay input and documented period indexing, rate representation, and rate/cash-flow time-unit matching before release. The honest label should also disclose these timing and compounding assumptions in addition to stating that flows and rates are treated as certain.

Formula and scope findings

• The formula is standard only if CF_t represents the cash flow at the end of period t, with t starting at 1, and initial_outlay is a separate time-zero amount. The specification does not define this timing convention.
• initial_outlay appears in the formula but is missing from the listed inputs; it must be an explicit input.
• The specification does not state whether the discount rate is entered as a decimal or percentage, nor that its compounding period must match the cash-flow periods.

Unit assumptions

• The discount rate is entered as a decimal per cash-flow period, such as 0.10 for 10% per year or 0.01 for 1% per month.
• Cash flows are equally spaced and indexed t=1,2,...; initial_outlay occurs at t=0 and is entered as a positive amount that is subtracted.
• The discount rate's time unit and compounding convention match the cash-flow periods; annual rates must not be applied directly to monthly cash flows without conversion.
• Positive cash flows are inflows and negative cash flows are outflows.

Boundary hardening

BREAK_CLAIMED · SELF_FLAGGED

The input discount_rate=-1 produces zero denominators and therefore undefined NPV and discounted cash flows. The specification does not state input validation, so a plain implementation could incorrectly emit Infinity, NaN, or another non-numeric result. The specification also has no actual piecewise formula branch and leaves the sign convention for initial_outlay potentially ambiguous.

Errata and corrections

No applied erratum is attached to this unique-name record.

Inspectable example

4 review vectors are recorded. One source-bound sample is shown below.

{
  "inputs": {
    "discount_rate": 0.1,
    "cash_flows": [
      110,
      121
    ],
    "initial_outlay": 200,
    "period_unit": "year"
  },
  "expected_outputs": {
    "npv": 0,
    "discounted_cf_table": [
      {
        "period": 1,
        "cash_flow": 110,
        "discounted_cash_flow": 100
      },
      {
        "period": 2,
        "cash_flow": 121,
        "discounted_cash_flow": 100
      }
    ]
  },
  "working": "Rate = 0.10. Period 1: 110/(1+0.10)^1 = 110/1.10 = 100. Period 2: 121/(1+0.10)^2 = 121/1.21 = 100. Sum of discounted cash flows = 100 + 100 = 200. NPV = 200 - 200 initial outlay = 0."
}

Related workflows

Sources and evidence

These pointers bind the page to evidence. They do not grant authority or collapse verification into deployment.

• VERIFIED_LEDGER.json · VERIFIED_CLEAN
• evidence-tranche4/tranche4-results.json
• BOUNDARY_HAZARD_CATALOG.json