confusion in time line diagram

how to draw time line daigram? for the every calculation of net presnt value we have to consider time 0 or not.

i m onfused in this pt.

eg. income start 2 years after initial outaly. in this shall we have to consider income at 2 or not?

 

Every project will have a time 0 and you will have to discount all the cashflows to time 0. If the question says that the initial outlay was on Jan 2022 and the income starts in 2 years time then we need to discount it to Jan 2022 which, in this case, will be your time 0.Since the initial outlay is already at time 0, you don't need to discount it.

 

present value

means every time we should start from 0.
pls explain following example.

assume initial outlay 1jan 2001 to 1 jan 2003 and income is at the end of 31 dec 2003. to 31 dec 2014
in this what is present value of income?

 

Yes we do need to start from time 0.
The initial outlay cannot have a duration. The initial outlay is the cost you incur for the first time, It may or may not be at time 0. You may, however, have other outlays. So only in those cases, will you discount it back to time 0.If the initial outlay is not at time 0, then we need to discount that also.
The question is unclear.Do you mean that there are expenditures on 1 Jan 2002 and 2003 as well? And do you also mean that the revenues are received from I jan 2003 to 1 jan 2015? In that case we can construct a time line for 14 years and calculate the NPV. But otherwise I really don't think we can do much with the information given.

 

time line

for time line.

0 1 2 3 4 ............... 20

we consider 0-1 as 1 year. 1-2 as 2 year n so on
is ths correct?

 

april 2013

question in aprl 2013
in short i am telling

initial out lay is on 1jan 2014. and new model developed from 1 jan 2016 to 31 dec 2021 income will start from at the end of jan 2016.(31 dec 2016)
in this case what should have to do?
to calculate present value of income at 2014 so 1 jan 2014 to 1 jan 2016 there are 2 years. we will take v^2 or v^3 or not?

 

Present value at 1/1/2014 = Present value at 1/1/2016 * v^2.

There is a difference of two years between those dates, so you need two years of discounting to move from 1/1/2016 to 1/1/2014.

 

Yes. From time 0 to time 1 is the first year. From time 1 to time 2 is the second year. etc.