Anand said:
How can I calculate the npv of a stream of monthly cashflows
using the actual/360 convention for compounding?
I assume you are asking how to compute NPV with monthly
cashflows and daily compounding.
=NPV(FV(rate/360, 30,, -1) - 1, ...)
where "rate" is the annual nominal rate. Thus, FV(...)-1
computes the effective monthly rate based on daily compounding.
By the way, unless you "must" use 360, arguably a better estimate
would be:
=NPV(FV(rate/365, 365/12,, -1) -1, ...)
But the "365" FV(...)-1 is almost the same as the "360" FV(...)-1
formatted as Percentage with 4 decimal places.
