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Net Cash flow can be derived from subtracting cash outflows from cash inflows. The formula representation can be given as- Net Cash Flow = Cash Inflows - Cash Outflows On the first day of the year

Net Cash flow can be derived from subtracting cash outflows from cash inflows. The formula representation can be given as- 

Net Cash Flow = Cash Inflows - Cash Outflows 

On the first day of the year, a man deposits ₱1,000 in a bank at 8% per year compounded annually.

₱1,000 + ₱1,000 * 8% = ₱1,000 + ₱80 = ₱1080 

He withdraws ₱80 at the end of the first year- 

₱1080 - ₱80 = ₱1,000

Second year compounding annually- 

₱1,000 + ₱1,000 * 8% = ₱1,000 + ₱80 = ₱1080 

He withdraws ₱90 at the end of the second year- 

₱1080 - ₱90 = ₱990 

Balance at the end of the third year- 

₱990 + ₱990 * 8% = ₱990 + ₱79.2 = ₱1069.2 

Net Cash Flow = Cash Inflows - Cash Outflows 

                     = ( 80 + 80 + 79.2) - ( 80 +90 ) 

                     = 239.2 - 170 

                     = ₱ 69.2 

 
 

May 17 2021 View more View Less

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