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Identify the recovery question
For −1,000 followed by three 400 receipts, cumulative raw cash reaches −600, −200 and +200 at the period ends. Raw recovery first occurs at the end of period three. A fractional 2.5 uses a within-period interpolation assumption.
Read the present-value result
At 10%, the same entered horizon has NPV -5.259204, and discounted recovery is not reached. Raw recovery within the horizon therefore does not imply positive NPV at that rate.
Include amounts beyond a recovery date
Adding another 400 at period four changes full-horizon NPV to 267.946179, while the first raw recovery remains period three. A metric that stops its accounting at recovery does not describe the effect of all later flows.
| Schedule | Raw recovery end | NPV at 10% |
|---|---|---|
| Three receipts of 400 | 3 | −5.259204 |
| Four receipts of 400 | 3 | 267.946179 |
Use both summaries within their definitions
Recovery timing can summarize one feature of a forecast. It is not an automatic risk classification or substitute for the complete discounted schedule. Nonconventional later outflows also require attention beyond the simple monotone-receipt recovery model.