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  {
   "cell_type": "markdown",
   "id": "d3369ec9",
   "metadata": {},
   "source": [
    "## Google and the Innovators Dilemma"
   ]
  },
  {
   "cell_type": "code",
   "execution_count": null,
   "id": "3bf87a2f",
   "metadata": {},
   "outputs": [],
   "source": [
    "# Imports\n",
    "\n",
    "import matplotlib.pyplot as plt\n",
    "import numpy as np"
   ]
  },
  {
   "cell_type": "code",
   "execution_count": null,
   "id": "90d453be",
   "metadata": {},
   "outputs": [],
   "source": [
    "# Assumptions\n",
    "margin = 0.6\n",
    "discount_rate = 0.10 # 10% discount rate\n",
    "years = 20 # Time horizon\n",
    "\n",
    "# Parameters\n",
    "\n",
    "annual_revenue = 195e9 # Google Search 2024 Revenue\n",
    "\n",
    "# Net Present Value Calculations in Python\n",
    "\n",
    "# --- Parameters ---\n",
    "cash_flow = annual_revenue * margin\n",
    "\n",
    "print(f\"With an assumed margin of {(margin*100):.2f}% Google Search has an annual net income of ${cash_flow/1e9:,.0f}B.\")\n"
   ]
  },
  {
   "cell_type": "code",
   "execution_count": null,
   "id": "893638c9",
   "metadata": {},
   "outputs": [],
   "source": [
    "# --- Annuity Formula (constant cash flow) ---\n",
    "# NPV = C * [(1 - (1 + r)^-n) / r]\n",
    "\n",
    "npv_annuity = cash_flow * ((1 - (1 + discount_rate) ** -years) / discount_rate)\n",
    "\n",
    "print(f\"NPV using annuity formula: ${npv_annuity/1e9:,.0f}B.\")"
   ]
  },
  {
   "cell_type": "code",
   "execution_count": null,
   "id": "865d2e98",
   "metadata": {},
   "outputs": [],
   "source": [
    "# --- Parameters ---\n",
    "growth_rate = .1             # Annual growth (e.g., 3%). Use negative for shrinkage.\n",
    "initial_cash_flow = cash_flow\n",
    "\n",
    "# --- General NPV Formula with growth ---\n",
    "# NPV = Σ [C0 * (1 + g)^(t - 1) / (1 + r)^t] for t in 1..n\n",
    "\n",
    "npv_growth = sum(\n",
    "    initial_cash_flow * (1 + growth_rate) ** (t - 1) / (1 + discount_rate) ** t\n",
    "    for t in range(1, years + 1)\n",
    ")\n",
    "\n",
    "print(f\"NPV with {growth_rate*100:.1f}% annual growth over {years} years: ${npv_growth/1e9:,.0f}B\")"
   ]
  },
  {
   "cell_type": "code",
   "execution_count": null,
   "id": "27c5801a",
   "metadata": {},
   "outputs": [],
   "source": [
    "# --- Growth scenarios to visualize ---\n",
    "growth_rates = [-0.25, -0.05, 0.00, 0.10]\n",
    "\n",
    "# --- NPV Calculation over Time for Each Growth Rate ---\n",
    "npvs = {}\n",
    "\n",
    "for g in growth_rates:\n",
    "    npv = []\n",
    "    for t in range(1, years + 1):\n",
    "        cash_flow_t = initial_cash_flow * (1 + g) ** (t - 1)\n",
    "        discounted_cf = cash_flow_t / (1 + discount_rate) ** t\n",
    "        npv.append(discounted_cf)\n",
    "    npvs[g] = npv\n",
    "\n",
    "# --- Plot Cumulative NPV ---\n",
    "plt.figure(figsize=(10, 6))\n",
    "\n",
    "# Colour palette: black for baseline, greys for the rest\n",
    "colour_map = {\n",
    "    -0.25: '0.85',   # light grey\n",
    "    -0.05: '0.65',   # mid-light grey\n",
    "     0.00: 'black',  # baseline\n",
    "     0.10: '0.45',   # dark grey\n",
    "}\n",
    "\n",
    "for g, values in npvs.items():\n",
    "    cumulative_npv = np.cumsum(values)\n",
    "    label = f\"{g*100:+.0f}% growth\"\n",
    "    plt.plot(\n",
    "        range(1, years + 1),\n",
    "        cumulative_npv / 1e12,      # convert to trillions\n",
    "        label=label,\n",
    "        color=colour_map[g],\n",
    "        linewidth=2\n",
    "    )\n",
    "\n",
    "plt.title(f\"Cumulative NPV of Google Search (${cash_flow/1e9:,.0f} B Starting Cash Flow)\")\n",
    "plt.xlabel(\"Year\")\n",
    "plt.ylabel(\"Cumulative NPV (Trillions USD)\")\n",
    "plt.legend(title=\"Annual Growth Rate\")\n",
    "plt.grid(True)\n",
    "plt.tight_layout()\n",
    "plt.show()"
   ]
  }
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