Robert Helewka
a2420ed692
Reorganize Palladium codebase into a modular architecture with `core/` shared logic and `app/` Streamlit UI, separating per-study assets into `studies/YYYYMM_<Vendor>/` folders containing notebooks, seed data, and configuration. Update README to reflect new structure, add `.gitignore` entries for `.env` and study exports, and refresh component documentation.
79 lines
2.3 KiB
Python
79 lines
2.3 KiB
Python
"""
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Net Present Value and discounting.
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Convention (matches the Forrester TEI methodology used in the Amazon Connect
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study):
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* The *Initial* investment (column "Initial" in TEI tables) is **not**
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discounted — it occurs at time zero.
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* Year-N cash flows are discounted at the end of the year:
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``PV = CF_n / (1 + r) ** n`` for ``n = 1, 2, …``.
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That matches the PDF note: *"The initial investment column contains costs
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incurred at 'time 0' or at the beginning of Year 1 that are not discounted.
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All other cash flows are discounted using the discount rate at the end of
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the year."*
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"""
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from __future__ import annotations
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from collections.abc import Iterable
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def discount_factor(year: int, discount_rate: float) -> float:
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"""Return ``1 / (1 + r) ** year``. Year 0 → 1.0 (no discount)."""
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if year < 0:
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raise ValueError("year must be >= 0")
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return 1.0 / ((1.0 + discount_rate) ** year)
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def present_value(amount: float, year: int, discount_rate: float) -> float:
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"""Discount ``amount`` from end-of-year ``year`` to present."""
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return amount * discount_factor(year, discount_rate)
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def present_value_series(
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cashflows: Iterable[float],
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discount_rate: float,
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start_year: int = 1,
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) -> float:
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"""
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Sum the present value of a stream of year-end cashflows.
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Args:
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cashflows: iterable of year-N amounts (Y1, Y2, …).
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discount_rate: e.g. 0.10 for 10%.
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start_year: year of the first element. Default 1 (skip year-0).
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"""
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total = 0.0
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for offset, cf in enumerate(cashflows):
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total += present_value(cf, start_year + offset, discount_rate)
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return total
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def npv(
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cashflows: Iterable[float],
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discount_rate: float,
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initial: float = 0.0,
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) -> float:
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"""
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Net Present Value.
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Args:
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cashflows: year-end cashflows for Year 1, Year 2, …
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discount_rate: e.g. 0.10
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initial: undiscounted year-0 cashflow (negative for a cost,
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positive for a one-off benefit).
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Returns:
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``initial + Σ CF_n / (1 + r)^n`` for ``n = 1..len(cashflows)``.
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Example::
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>>> # Amazon Connect total benefits PV ≈ $101.7M
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>>> benefits = [27_279_019, 40_333_658, 57_983_794]
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>>> round(npv(benefits, 0.10) / 1_000_000, 1)
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101.7
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"""
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return initial + present_value_series(cashflows, discount_rate, start_year=1)
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