Assumptions and method
A positive NPV cannot fund a negative cash balance. This tool excludes financing interest and assumes period-end net flows.
Test a scenario
Use the result in a decision
Use consistent currency, timing and price assumptions.
A positive NPV cannot fund a negative cash balance. This tool excludes financing interest and assumes period-end net flows.
Set a baseline and change one assumption to compare outcomes.
A worked example
Follow the fixed teaching example
- Cash balances are 8,000 − 6,000 = 2,000; then −5,000; then 0; then 9,000.
- The lowest balance is −5,000, so an additional 5,000 is required to avoid a negative balance under these timings.
These illustrative inputs describe a project scenario, not a published benchmark. All monetary inputs use the same currency and price basis.
- Opening cash
- 8000
- Net cash flows by period
- -6000, -7000, 5000, 9000
- Additional funding required
- 5,000
- Closing cash before new funding
- 9,000
| Period | Net cash flow | Cash balance |
|---|---|---|
| 1 | -6,000 | 2,000 |
| 2 | -7,000 | -5,000 |
| 3 | 5,000 | 0 |
| 4 | 9,000 | 9,000 |
Interpret the output only within the assumptions above. Changing the inputs changes the result; it does not validate the inputs.
Source & credit
Standard estimating practice; the cited guide documents use rather than claiming invention.
GAO: Cost Estimating and Assessment Guide
This is independently written code and explanation of the underlying method. The linked publication, its diagrams and its trademarks remain its owner’s material; no permission to reuse them is implied.