I'm making a DCF for a debt portfolio (car leases) and the portfolio is funded by debt. My problem is that while during the first 3 years I am getting positive cash the discount is working fine, however, in year 4 I need to pay back the principal payment so my net cash is negative. When I then discount this negative cash it is pretty much halving.. So I am left with a present value loss of half what I will actually pay.
This is then causing my model to say that if the investment has certain parameters it will be loss-making (when I sum all of the 4 years net income) but positive in a present value sense (when I sum all of the 4 years present values).
I understand that getting net profit in as soon as you can is good because you can then use that money to generate returns but this seems wrong.