PROJECT NPV Sensitivity Analysis

(In Thouands of $) 2009 2010 2011 2012

Year 0 Year 1 Year 2 Year 3
Key Assumptions
Unit Sales 2000 4000 5600
Inflation Rate 2.00% 2.50% 3.00%
Real Cost of Capital 11.00% 11.20% 11.40%
Tax Rate 35.00% 35.00% 35.00%

Discounting
Discount Rate = Cost of Capital 13.22% 13.98% 14.74%
Cumulative Discount Factor 13.22% 29.05% 48.07%

Price or Cost / Unit

Sales Revenue / Unit $9.70 $9.94 $10.24

Variable Cost / Unit

Direct Labor $3.50 $3.59 $3.70
Materials $2.00 $2.05 $2.11
Selling Expenses $1.20 $1.23 $1.27
Others $0.70 $0.72 $0.74
Total Variable Cost / Unit $7.40 $7.59 $7.81

Cash Fixed Costs:

Lease Payment $2,800.00 $2,870.00 $2,956.10
Property Taxes $580.00 $594.50 $612.34
Administration $450.00 $461.25 $475.09
Advertising $930.00 $953.25 $981.85
Other $520.00 $533.00 $548.99
Total Cash Fixed Cost $5,280.00 $5,412.00 $5,574.36

Working Cap / Next Yr Unit Sales $0.87 $0.89 $0.91 $0.94

Working Capital $1,740.00 $3,549.60 $5,093.68 $6,370.73

Cash Flow Forecasts

Sales Revenue $19,400.00 $39,770.00 $57,348.34
Variable Costs $14,800.00 $30,340.00 $43,750.28
Gross Margin $4,600.00 $9,430.00 $13,598.06

Cash Fixed Costs $5,280.00 $5,412.00 $5,574.00

Depreciation $1,621.43 $1,621.43 $1,621.43
Total Fixed Costs $6,901.43 $7,033.43 $7,195.43

Operating Profit $(2,301.43) $2,396.57 $6,402.63

Taxes $(805.50) $838.80 $2,240.92
Net Profit $(1,495.93) $1,557.77 $4,161.71

Add Back Depreciation $1,621.43 $1,621.43 $1,621.43

Operating Cash Flow $125.50 $3,179.20 $5,783.14

Investment in Working Capital $(1,740.00) $(1,809.60) $(1,544.08) $(1,277.06)

Investment in Plant & Equipment $(11,350.00)
Cash Flow $(13,090.00) $(1,809.60) $(1,544.08) $(1,277.06)

Cash Flows $(13,090.00) $(1,684.10) $1,635.12 $4,506.08

Present Value of Each Cash Flow $(13,090.00) $(1,487.46) $1,267.06 $3,043.16
Net Present Value $3,468.53

Data Table: Sensitivity of the Project NPV to Unit Sales and the Real Cost of Capital
Input Values for Unit Sales Scale Factor
Output Formula: Proj NPV $3,468.53 80.00% 90.00% 100.00%
9.00%
Input Values for Date 0 Real Cost of Capital 11.00%
13.00%
15.00%
17.00%
 2013 2014 2015 2016
Year 4 Year 5 Year 6 Year 7

6800 7400 3700 1800

3.50% 4.00% 4.00% 4.00%
11.60% 11.80% 12.00% 12.20%
35.00% 35.00% 35.00% 35.00%

15.51% 16.27% 16.48% 16.69%

71.03% 98.86% 131.64% 170.29%

$10.60 $11.02 $11.46 $11.92

$3.82 $3.98 $4.14 $4.30

$2.19 $2.27 $2.36 $2.46
$1.31 $1.36 $1.42 $1.47
$0.76 $0.80 $0.83 $0.86
$8.09 $8.41 $8.75 $9.10

$3,059.56 $3,181.95 $3,309.22 $3,441.59

$633.77 $659.12 $685.48 $712.90
$491.72 $511.38 $531.84 $553.11
$1,016.21 $1,056.86 $1,099.14 $1,143.10
$568.20 $590.93 $614.57 $639.15
$5,769.46 $6,000.24 $6,240.25 $6,489.86

$0.97 $1.01 $1.05 $1.09

$7,175.51 $3,731.26 $1,887.82 $-

$72,074.57 $81,571.46 $42,417.16 $21,460.79

$54,984.73 $62,229.77 $32,359.48 $16,372.15
$17,089.85 $19,341.69 $10,057.68 $5,088.64

$5,789.00 $6,000.00 $6,240.00 $6,490.00

$1,621.43 $1,621.43 $1,621.43 $1,621.43
$7,410.43 $7,621.43 $7,861.43 $8,111.43

$9,679.42 $11,720.26 $2,196.25 $(3,022.79)

$3,387.80 $4,102.09 $768.69 $(1,057.98)
$6,291.62 $7,618.17 $1,427.56 $(1,964.81)

$1,621.43 $1,621.43 $1,621.43 $1,621.43

$7,913.05 $9,239.60 $3,048.99 $(343.38)

$(804.77) $3,444.24 $1,843.45 $1,887.82

 $1,400.00
$(804.77) $3,444.24 $1,843.45 $3,287.82

$7,108.28 $12,683.84 $4,892.44 $2,944.43

$4,156.10 $6,378.18 $2,112.13 $1,089.36

110.00% 120.00%
PROJECT NPV Working Capital
(In Thouands of $) 2009 2010 2011 2012
Year 0 Year 1 Year 2 Year 3
Key Assumptions
Unit Sales 2000 4000 5600
Inflation Rate 2.00% 2.50% 3.00%
Real Cost of Capital 11.00% 11.20% 11.40%
Tax Rate 35.00% 35.00% 35.00%

Discounting
Discount Rate = Cost of Capital 13.22% 13.98% 14.74%
Cumulative Discount Factor 13.22% 29.05% 48.07%

Price or Cost / Unit

Sales Revenue / Unit $9.70 $9.94 $10.24

Variable Cost / Unit

Direct Labor $3.50 $3.59 $3.70
Materials $2.00 $2.05 $2.11
Selling Expenses $1.20 $1.23 $1.27
Others $0.70 $0.72 $0.74
Total Variable Cost / Unit $7.40 $7.59 $7.81

Cash Fixed Costs:

Lease Payment $2,800.00 $2,870.00 $2,956.10
Property Taxes $580.00 $594.50 $612.34
Administration $450.00 $461.25 $475.09
Advertising $930.00 $953.25 $981.85
Other $520.00 $533.00 $548.99
Total Cash Fixed Cost $5,280.00 $5,412.00 $5,574.36

Working Cap / Next Yr Unit Sales $0.87 $0.89 $0.91 $0.94

Working Capital $1,740.00 $3,549.60 $5,093.68 $6,370.73

Cash Flow Forecasts

Sales Revenue $19,400.00 $39,770.00 $57,348.34
Variable Costs $14,800.00 $30,340.00 $43,750.28
Gross Margin $4,600.00 $9,430.00 $13,598.06

Cash Fixed Costs $5,280.00 $5,412.00 $5,574.00

Depreciation $1,621.43 $1,621.43 $1,621.43
Total Fixed Costs $6,901.43 $7,033.43 $7,195.43

Operating Profit $(2,301.43) $2,396.57 $6,402.63

Taxes $(805.50) $838.80 $2,240.92
Net Profit $(1,495.93) $1,557.77 $4,161.71

Add Back Depreciation $1,621.43 $1,621.43 $1,621.43

Operating Cash Flow $125.50 $3,179.20 $5,783.14

Investment in Working Capital $(1,740.00) $(1,809.60) $(1,544.08) $(1,277.06)

Investment in Plant & Equipment $(11,350.00)
Cash Flow $(13,090.00) $(1,809.60) $(1,544.08) $(1,277.06)

Cash Flows $(13,090.00) $(1,684.10) $1,635.12 $4,506.08

Present Value of Each Cash Flow $(13,090.00) $(1,487.46) $1,267.06 $3,043.16
Net Present Value $3,468.53
 2013 2014 2015 2016
Year 4 Year 5 Year 6 Year 7

6800 7400 3700 1800

3.50% 4.00% 4.00% 4.00%
11.60% 11.80% 12.00% 12.20%
35.00% 35.00% 35.00% 35.00%

15.51% 16.27% 16.48% 16.69%

71.03% 98.86% 131.64% 170.29%

$10.60 $11.02 $11.46 $11.92

$3.82 $3.98 $4.14 $4.30

$2.19 $2.27 $2.36 $2.46
$1.31 $1.36 $1.42 $1.47
$0.76 $0.80 $0.83 $0.86
$8.09 $8.41 $8.75 $9.10

$3,059.56 $3,181.95 $3,309.22 $3,441.59

$633.77 $659.12 $685.48 $712.90
$491.72 $511.38 $531.84 $553.11
$1,016.21 $1,056.86 $1,099.14 $1,143.10
$568.20 $590.93 $614.57 $639.15
$5,769.46 $6,000.24 $6,240.25 $6,489.86

$0.97 $1.01 $1.05 $1.09

$7,175.51 $3,731.26 $1,887.82 $-

$72,074.57 $81,571.46 $42,417.16 $21,460.79

$54,984.73 $62,229.77 $32,359.48 $16,372.15
$17,089.85 $19,341.69 $10,057.68 $5,088.64

$5,789.00 $6,000.00 $6,240.00 $6,490.00

$1,621.43 $1,621.43 $1,621.43 $1,621.43
$7,410.43 $7,621.43 $7,861.43 $8,111.43

$9,679.42 $11,720.26 $2,196.25 $(3,022.79)

$3,387.80 $4,102.09 $768.69 $(1,057.98)
$6,291.62 $7,618.17 $1,427.56 $(1,964.81)

$1,621.43 $1,621.43 $1,621.43 $1,621.43

$7,913.05 $9,239.60 $3,048.99 $(343.38)

$(804.77) $3,444.24 $1,843.45 $1,887.82

 $1,400.00
$(804.77) $3,444.24 $1,843.45 $3,287.82

$7,108.28 $12,683.84 $4,892.44 $2,944.43

$4,156.10 $6,378.18 $2,112.13 $1,089.36
PROJECT NPV Forecasting Cash Flow
(In Thouands of $) 2009 2010 2011 2012
Year 0 Year 1 Year 2 Year 3
Key Assumptions
Unit Sales 2000 4000 5600
Inflation Rate 2.00% 2.50% 3.00%
Real Cost of Capital 11.00% 11.20% 11.40%
Tax Rate 35.00% 35.00% 35.00%

Discounting
Discount Rate = Cost of Capital 13.22% 13.98% 14.74%
Cumulative Discount Factor 13.22% 29.05% 48.07%

Price or Cost / Unit

Sales Revenue / Unit $9.70 $9.94 $10.24

Variable Cost / Unit

Direct Labor $3.50 $3.59 $3.70
Materials $2.00 $2.05 $2.11
Selling Expenses $1.20 $1.23 $1.27
Others $0.70 $0.72 $0.74
Total Variable Cost / Unit $7.40 $7.59 $7.81

Cash Fixed Costs:

Lease Payment $2,800.00 $2,870.00 $2,956.10
Property Taxes $580.00 $594.50 $612.34
Administration $450.00 $461.25 $475.09
Advertising $930.00 $953.25 $981.85
Other $520.00 $533.00 $548.99
Total Cash Fixed Cost $5,280.00 $5,412.00 $5,574.36
 2013 2014 2015 2016
Year 4 Year 5 Year 6 Year 7

6800 7400 3700 1800

3.50% 4.00% 4.00% 4.00%
11.60% 11.80% 12.00% 12.20%
35.00% 35.00% 35.00% 35.00%

15.51% 16.27% 16.48% 16.69%

71.03% 98.86% 131.64% 170.29%

$10.60 $11.02 $11.46 $11.92

$3.82 $3.98 $4.14 $4.30

$2.19 $2.27 $2.36 $2.46
$1.31 $1.36 $1.42 $1.47
$0.76 $0.80 $0.83 $0.86
$8.09 $8.41 $8.75 $9.10

$3,059.56 $3,181.95 $3,309.22 $3,441.59

$633.77 $659.12 $685.48 $712.90
$491.72 $511.38 $531.84 $553.11
$1,016.21 $1,056.86 $1,099.14 $1,143.10
$568.20 $590.93 $614.57 $639.15
$5,769.46 $6,000.24 $6,240.25 $6,489.86
PROJECT NPV Basics
(In Thouands of $) 2009 2010 2011 2012
Year 0 Year 1 Year 2 Year 3
Key Assumptions
Unit Sales 2000 4000 5600
Inflation Rate 2.00% 2.50% 3.00%
Real Cost of Capital 11.00% 11.20% 11.40%
Tax Rate 35.00% 35.00% 35.00%

Discounting
Discount Rate = Cost of Capital 13.22% 13.98% 14.74%
Cumulative Discount Factor 13.22% 29.05% 48.07%

Price or Cost / Unit

Sales Revenue / Unit $9.70 $9.94 $10.24
Variable Cost / Unit $7.40 $7.59 $7.81
Cash Fixed Costs $5,280.00 $5,412.00 $5,574.00

Cash Flow Forecasts

Sales Revenue $19,400.00 $39,770.00 $57,348.34
Variable Costs $14,800.00 $30,340.00 $43,750.28
Gross Margin $4,600.00 $9,430.00 $13,598.06

Cash Fixed Costs $5,280.00 $5,412.00 $5,574.00

Depreciation $1,621.43 $1,621.43 $1,621.43
Total Fixed Costs $6,901.43 $7,033.43 $7,195.43

Operating Profit $(2,301.43) $2,396.57 $6,402.63

Taxes $(805.50) $838.80 $2,240.92
Net Profit $(1,495.93) $1,557.77 $4,161.71

Add Back Depreciation $1,621.43 $1,621.43 $1,621.43

Operating Cash Flow $125.50 $3,179.20 $5,783.14

Investment in Plant & Equipment $(11,350.00)

Cash Flow $(11,350.00) $125.50 $3,179.20 $5,783.14
Present Value of Each Cash Flow $(11,350.00) $110.85 $2,463.58 $3,905.61
Net Present Value $6,110.09
 2013 2014 2015 2016
Year 4 Year 5 Year 6 Year 7

6800 7400 3700 1800

3.50% 4.00% 4.00% 4.00%
11.60% 11.80% 12.00% 12.20%
35.00% 35.00% 35.00% 35.00%

15.51% 16.27% 16.48% 16.69%

71.03% 98.86% 131.64% 170.29%

$10.60 $11.02 $11.46 $11.92

$8.09 $8.41 $8.75 $9.10
$5,789.00 $6,000.00 $6,240.00 $6,490.00

$72,074.57 $81,571.46 $42,417.16 $21,460.79

$54,984.73 $62,229.77 $32,359.48 $16,372.15
$17,089.85 $19,341.69 $10,057.68 $5,088.64

$5,789.00 $6,000.00 $6,240.00 $6,490.00

$1,621.43 $1,621.43 $1,621.43 $1,621.43
$7,410.43 $7,621.43 $7,861.43 $8,111.43

$9,679.42 $11,720.26 $2,196.25 $(3,022.79)

$3,387.80 $4,102.09 $768.69 $(1,057.98)
$6,291.62 $7,618.17 $1,427.56 $(1,964.81)

$1,621.43 $1,621.43 $1,621.43 $1,621.43

$7,913.05 $9,239.60 $3,048.99 $(343.38)

$1,400.00
$7,913.05 $9,239.60 $3,048.99 $1,056.62
$4,626.63 $4,646.21 $1,316.29 $390.92
THE YIELD CURVE - Using it to Determine Forward Rate
Maturity Time to Yield to Forward
Inputs Date Maturity Maturity Rates
Today 07/07/09
One month Treasury Bill 08/07/09 0.09 3.96% 3.96%
Three month Treasury Bill 10/04/09 0.24 5.19% 5.86%
Six month Treasury Bill 01/03/10 0.49 5.43% 5.67%
One year Treasury Bill 07/07/10 1.00 5.78% 6.12%
Two Year Investment Bond 07/07/11 2.00 5.94% 6.10%
Three Year Investment Bond 07/06/12 3.00 5.99% 6.10%
Four Year Investmetn Bond 07/06/13 4.00 6.05% 6.22%
Five Year Investment Bond 07/06/14 5.00 6.26% 7.10%
Ten Year Investment Bond 07/06/19 10.00 6.56% 6.86%
Fifteen Year Investment Bond 07/06/24 15.00 6.59% 6.65%
Twenty Year Investment Bond 07/07/29 20.00 6.54% 6.39%
Twenty Five Year Investment Bond 07/05/34 24.99 6.34% 5.54%
Thrity Year Investment Bond 07/07/39 30.00 6.08% 4.79%

U.S. Treasury Zero - Coupon Yield Curve

7.50%
7.00%
Yield to Maturity (Annual)

6.50%
6.00%
5.50%
5.00%
4.50%
4.00%
Column D
3.50%
Column E
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
0.09 0.24 0.49 1.00 2.00 3.00 4.00 5.00 10.00 15.00 20.00 24.99 30.00

Time to Maturity (Years)

THE YIELD CURVE - Obtaining it from Bond Listings 16.25%
Maturity Time to Yield to 16.00%
Inputs Date Maturity Maturity 15.75%

Yield to Maturity (Annual)

Today 07/07/09 15.50%
One month Treasury Bill 08/07/09 0.09 12.50% 15.25%
Three month Treasury Bill 10/04/09 0.24 12.95% 15.00%
14.75%
Six month Treasury Bill 01/03/10 0.49 13.00%
14.50%
One year Treasury Bill 07/07/10 1.00 13.25%
14.25%
Two Year Investment Bond 07/07/11 2.00 13.50% 14.00%
Three Year Investment Bond 07/06/12 3.00 13.88% 13.75%
Four Year Investmetn Bond 07/06/13 4.00 14.00% 13.50%
Five Year Investment Bond 07/06/14 5.00 14.34% 13.25%
Seven Year Investment Bond 07/06/16 7.00 14.70% 13.00%
Ten Year Investment Bond 07/06/19 10.00 14.86% 12.75%
Fifteen Year Investment Bond 07/06/24 15.00 15.36% 12.50%
12.25%
Twenty Year Investment Bond 07/07/29 20.00 15.70%
- 2.50 5.00
Twenty Five Year Investment Bond 07/05/34 24.99 16.00%
Thrity Year Investment Bond 07/07/39 30.00 16.22%

Bond Inputs
Rate Convention: 1=EAR, 0=APR 1 Effective Annual Rate
Annual Coupon Rate (CR) 12.00%
Number of Payments / Year (NOP) 1
Number of Periods to Maturity (N) 10
Face Value (M) $1,000.00

Outputs
Coupon Payment (INT) $120.00

Calculate the Price and Yield to Maturity of a Coupon Bond using the Cash Flows
Period 0 1 2 3
Time (Years) 0 1 2 3
Cash Flows $120.00 $120.00 $120.00
Yield to Maturity (Annualized) 12.50% 12.95% 13.00%
Discount Rate / Period 12.50% 12.95% 13.00%
Present Value of Cash Flow $106.67 $94.06 $83.17
Coupon Bond Price $867.52
Coupon Bond Discount Rate / Period 14.60%
Coupon Bond Yield to Maturity 14.60%
 Treasury Coupon Yield Curve
16.25%
16.00%
15.75%
Yield to Maturity (Annual)

15.50%
15.25%
15.00%
14.75%
14.50%
14.25%
14.00%
13.75%
13.50%
13.25%
13.00%
12.75%
12.50%
12.25%
- 2.50 5.00 7.50 10.00 12.50 15.00 17.50 20.00 22.50 25.00 27.50 30.00

Time to Maturity (Years)

4 5 6 7 8 9 10
4 5 6 7 8 9 10
$120.00 $120.00 $120.00 $120.00 $120.00 $120.00 $1,120.00
13.25% 13.50% 13.88% 14.00% 14.34% 14.86% 15.36%
13.25% 13.50% 13.88% 14.00% 14.34% 14.86% 15.36%
$72.95 $63.71 $55.02 $47.96 $41.09 $34.48 $268.43
THE YIELD CURVE - Obtaining it from Bond Listings
Maturity Time to Yield to
Inputs Date Maturity Maturity
Today 07/07/09
One month Treasury Bill 08/07/09 0.09 3.96%
Three month Treasury Bill 10/04/09 0.24 5.19%
Six month Treasury Bill 01/03/10 0.49 5.43%
One year Treasury Bill 07/07/10 1.00 5.78%
Two Year Investment Bond 07/07/11 2.00 5.94%
Three Year Investment Bond 07/06/12 3.00 5.99%
Four Year Investmetn Bond 07/06/13 4.00 6.05%
Five Year Investment Bond 07/06/14 5.00 6.26%
Ten Year Investment Bond 07/06/19 10.00 6.56%
Fifteen Year Investment Bond 07/06/24 15.00 6.59%
Twenty Year Investment Bond 07/07/29 20.00 6.54%
Twenty Five Year Investment Bond 07/05/34 24.99 6.34%
Thrity Year Investment Bond 07/07/39 30.00 6.08%

U.S. Treasury Zero - Coupon Yield Curve

6.75%
6.50%
6.25%
Yield to Maturity (Annual)

6.00%
5.75%
5.50%
5.25%
5.00%
4.75%
4.50%
4.25%
4.00%
3.75%
- 2.50 5.00 7.50 10.00 12.50 15.00 17.50 20.00 22.50

Time to Maturity (Years)

d Curve

20.00 22.50 25.00 27.50 30.00

 STOCK VALUATION - Dynamic Chart
Dynamic Chart of Two St
Inputs $325.00
$300.00
Inflation Rate 3.00% 6 $275.00

Intrinsic Value / Share

$250.00
Earning Retention Rate 50.00% 5 $225.00
$200.00
$175.00
$150.00
$125.00
$100.00
7.00% 8.00% 9.0

Outputs
Real Discount Rate (Real K) 9.00% 7.00% 8.00% 9.00%
Intrinsic Value / Share $176.26 $318.27 $226.97 $176.26

Nominal Discount Rate (k) 12.27%

Stage 1 : Explicit
Historical Data Horizon (ROI
Period -2 -1 0 1
Inflation Rate 2.80% 2.80% 3.00%
Reat Return on Investment (Real ROI) 22.30% 20.70% 19.00%
Nominal Return on Investment 25.70% 24.40% 22.57%
Real Growth Rate in Dividend (Real g) 11.20% 10.40% 9.50%
Nominal Growth Rate in Dividend (g) 14.50% 13.70% 12.79%
Nominal Dividend / Share $5.10 $5.84 $6.64 $7.49
Continuation Value / Share
Sum of Future Div. & Con. Value / Shr $7.49
PV of Future Div. & Cont. Value / Shr $6.67
Intrinsic Value/Share $176.26
Chart
Dynamic Chart of Two Stage Dividend Discount Model
$325.00
$300.00
$275.00
Intrinsic Value / Share

$250.00
$225.00
$200.00
$175.00
$150.00
$125.00
$100.00
7.00% 8.00% 9.00% 10.00% 11.00% 12.00%
Real Discount Rate

10.00% 11.00% 12.00%

$144.00 $121.67 $105.30

Stage : 2
Infinite
Stage 1 : Explicit Forecast Horizon
Horizon (ROI > k) (ROI = k)
2 3 4 5 6
3.00% 3.00% 3.00% 3.00% 3.00%
17.00% 15.00% 13.00% 11.00% 9.00%
20.51% 18.45% 16.39% 14.33% 12.27%
8.50% 7.50% 6.50% 5.50% 4.50%
11.76% 10.73% 9.69% 8.66% 7.64%
$8.37 $9.27 $10.17 $11.05 $11.89
$256.51
$8.37 $9.27 $10.17 $267.56
$6.64 $6.55 $6.40 $150.00
 STOCK VALUATION - TWO STAGE
Inputs
Inflation Rate 3.00%
Real Discount Rate (Real k) 9.00%
Earning Retention Rate 50.00%

Outputs
Nominal Discount Rate (k) 12.27%

Stage 1
Historical Data Ho
Period -2 -1 0 1
Inflation Rate 2.80% 2.80% 3.00%
Reat Return on Investment (Real ROI) 22.30% 20.70% 19.00%
Nominal Return on Investment 25.70% 24.40% 22.57%
Real Growth Rate in Dividend (Real g) 11.20% 10.40% 9.50%
Nominal Growth Rate in Dividend (g) 14.50% 13.70% 12.79%
Nominal Dividend / Share $5.10 $5.84 $6.64 $7.49
Continuation Value / Share
Sum of Future Div. & Con. Value / Shr $7.49
PV of Future Div. & Cont. Value / Shr $6.67
Intrinsic Value/Share $176.26
AGE

Stage : 2
Infinite
Stage 1 : Explicit Forecast Horizon
Horizon (ROI > k) (ROI = k)
2 3 4 5 6
3.00% 3.00% 3.00% 3.00% 3.00%
17.00% 15.00% 13.00% 11.00% 9.00%
20.51% 18.45% 16.39% 14.33% 12.27%
8.50% 7.50% 6.50% 5.50% 4.50%
11.76% 10.73% 9.69% 8.66% 7.64%
$8.37 $9.27 $10.17 $11.05 $11.89
$256.51
$8.37 $9.27 $10.17 $267.56
$6.64 $6.55 $6.40 $150.00
 BOND VALUATION - System of Five bond Variables
Annual Percentage Rate
Inputs
Rate Convetion (1= EAR, 0=APR) 0 EAR = Effective Annual Rate Convention & APR = Annual Perce
Annual Coupon Rate (CR) 5.00%
Yield to Maturity (Annualized) (Kd) 9.00%
Number of Payment / Year (NOP) 2.00
Numer of Periods to Maturity (N) 8
Face Value (M) $1,000.00
Discount Rate / Period (DR) 4.50% =IF($C$6=1,((1+Kd)^(1/NOP))-1,Kd/NOP)
Coupon Payment (INT) $25.00
Bond Price (VB) $868.08 =-PV(DR,N,INT,M)

(1) Number of Periods to Maturity (N)

Number of Periods to Maturing using the NPER Function 8 =NPER(DR,INT,-VB,M)

(2) Face Value (M)

Face Value using the FV Function $1,000.00 =FV(DR,N,INT,-VB)
Face Value using the Formula $1,000.00 =VB*((1+DR)^N)-INT*(((1+DR

(3) Find Discount Rate / Period (DR)

Discount Rate / Period using the RATE Function 4.50% =RATE(N,INT,-VB,M)

(4) Coupon Payment (INT)

Coupon Payment using the PMT Function $25.00 =PMT(DR,N,-VB,M)
Coupon Payment using the Formula $25.00 =(VB-M/((1+DR)^N))/((1-((1+D

(5) Bond Price (VB)

Bond Price using the PV Function $868.08 =-PV(DR,N,INT,M)
Bond Price using the Formula $868.08 =INT*(1-((1+DR)^(-N)))/DR+M
nd Variables

vention & APR = Annual Percentage Rate Convention

NPER(DR,INT,-VB,M)

FV(DR,N,INT,-VB)
VB*((1+DR)^N)-INT*(((1+DR)^N)-1)/DR

RATE(N,INT,-VB,M)

PMT(DR,N,-VB,M)
(VB-M/((1+DR)^N))/((1-((1+DR)^(-N)))/DR)

PV(DR,N,INT,M)
INT*(1-((1+DR)^(-N)))/DR+M/((1+DR)^N)
 BOND VALUATION - BY YIELD TO MATURITY
Effective Annual Rate
Inputs
Rate Convetion (1= EAR, 0=APR) 1 EAR = Effective Annual Rate Convention & APR = Annual Perce
Annual Coupon Rate (CR) 5.00%
Yield to Maturity (Annualized) (Kd) 9.00%
Number of Payment / Year (NOP) 2.00
Numer of Periods to Maturity (N) 12
Face Value (M) $1,000.00

Output
Discount Rate / Period (DR) 4.40% =IF($C$6=1,((1+Kd)^(1/NOP))-1,Kd/NOP)
Coupon Payment (INT) $25.00

Chart Outputs
Yield to Maturity (Annualized) 1% 2% 3% 4%
Discount Rate / Period 0.50% 1.00% 1.49% 1.98%
Bond Price $1,232.54 $1,169.44 $1,110.36 $1,055.02

$1,250.00
$1,200.00
$1,150.00
$1,100.00
$1,050.00
$1,000.00
$950.00 Bond Price

$900.00
$850.00
$800.00
$750.00
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10 11
% %
MATURITY

vention & APR = Annual Percentage Rate Convention

5% 6% 7% 8% 9% 10% 11%
2.47% 2.96% 3.44% 3.92% 4.40% 4.88% 5.36%
$1,003.13 $954.46 $908.77 $865.85 $825.50 $787.55 $751.83
 BOND VALUATION - BY YIELD TO MATURITY
Annual Percentage Rate
Inputs
Rate Convetion (1= EAR, 0=APR) 0 EAR = Effective Annual Rate Convention & APR = Annual Perce
Annual Coupon Rate (CR) 5.00%
Yield to Maturity (Annualized) (Kd) 9.00%
Number of Payment / Year (NOP) 2.00
Numer of Periods to Maturity (N) 12
Face Value (M) $1,000.00

Output
Discount Rate / Period (DR) 4.50% =IF($C$6=1,((1+Kd)^(1/NOP))-1,Kd/NOP)
Coupon Payment (INT) $25.00

Chart Outputs
Yield to Maturity (Annualized) 1% 2% 3% 4%
Discount Rate / Period 0.50% 1.00% 1.50% 2.00%
Bond Price $1,232.38 $1,168.83 $1,109.08 $1,052.88

$1,250.00
$1,200.00
$1,150.00
$1,100.00
$1,050.00
$1,000.00
$950.00 Bond Price
$900.00
$850.00
$800.00
$750.00
$700.00
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10 11
% %
MATURITY

vention & APR = Annual Percentage Rate Convention

5% 6% 7% 8% 9% 10% 11%
2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50%
$1,000.00 $950.23 $903.37 $859.22 $817.63 $778.42 $741.44
 BOND VALUATION - BASIC
Annual Percentage Rate
Inputs
Rate Convetion (1= EAR, 0=APR) 0 EAR = Effective Annual Rate Convention & APR = Annual Perce
Annual Coupon Rate (CR) 5.00%
Yield to Maturity (Annualized) (Kd) 9.00%
Number of Payment / Year (NOP) 2.00
Numer of Periods to Maturity (N) 12
Face Value (M) $1,000.00

Output
Discount Rate / Period (DR) 4.50% =IF($C$6=1,((1+Kd)^(1/NOP))-1,Kd/NOP)
Coupon Payment (INT) $25.00

Period 0 1 2 3
Time (Years) 0 0.5 1 1.5
Cash Flows $25.00 $25.00 $25.00
Present Value of Cash Flow $23.92 $22.89 $21.91
Bond Price $817.63 =sum(d19:o19)

Calculate Bond Price using the Formula

Bond Price $817.63 =INT*(1-((1+DR)^(-N)))/DR+M/((1+DR)^N)

Calculate Bond Price using the PV Function

Bond Price $817.63 =-PV(DR,N,INT,M)
vention & APR = Annual Percentage Rate Convention

4 5 6 7 8 9 10
2 2.5 3 3.5 4 4.5 5
$25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00
$20.96 $20.06 $19.20 $18.37 $17.58 $16.82 $16.10
 11 12
5.5 6
$25.00 $1,025.00
$15.40 $604.41
 LOAN AMORTIZATION - Sensitivity Analysis
Inputs
Present Value $300,000.00
Interest Rate / year 8%
Number of Years 30

Output
Year 1 2 3 4
Beginning Principal Balance $300,000.00 $297,351.77 $294,491.68 $291,402.79
Payment $26,648.23 $26,648.23 $26,648.23 $26,648.23
Interest Component $24,000.00 $23,788.14 $23,559.33 $23,312.22
Principal Component $2,648.23 $2,860.09 $3,088.90 $3,336.01

Data Table : Sensitivity of the Interest Component to the Interest Rate / Year
Input Values for
Interest Rate / Year
6.00% $18,000.00 $16,920.00 $16,984.80 $16,980.91
7.00% $21,000.00 $19,530.00 $19,632.90 $19,625.70
8.00% $24,000.00 $22,080.00 $22,233.60 $22,221.31
9.00% $27,000.00 $24,570.00 $24,788.70 $24,769.02
10.00% $30,000.00 $27,000.00 $27,300.00 $27,270.00

Data Table : Sensitivity of the Principal Component to the Interest Rate / Year
Input Values for
Interest Rate / Year
6.00% $1,260.00 $17,924.40 $16,924.54 $16,984.53
7.00% $1,470.00 $20,897.10 $19,537.20 $19,632.40
8.00% $1,680.00 $23,865.60 $22,090.75 $22,232.74
9.00% $1,890.00 $26,829.90 $24,585.31 $24,787.32
10.00% $2,100.00 $29,790.00 $27,021.00 $27,297.90
ty Analysis

5 6 7 8 9 10 11
$288,066.78 $284,463.89 $280,572.77 $276,370.36 $271,831.76 $266,930.07 $261,636.25
$26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23
$23,045.34 $22,757.11 $22,445.82 $22,109.63 $21,746.54 $21,354.41 $20,930.90
$3,602.89 $3,891.12 $4,202.41 $4,538.60 $4,901.69 $5,293.82 $5,717.33

$16,981.15 $16,981.13 $16,981.13 $16,981.13 $16,981.13 $16,981.13 $16,981.13

$19,626.20 $19,626.17 $19,626.17 $19,626.17 $19,626.17 $19,626.17 $19,626.17
$22,222.30 $22,222.22 $22,222.22 $22,222.22 $22,222.22 $22,222.22 $22,222.22
$24,770.79 $24,770.63 $24,770.64 $24,770.64 $24,770.64 $24,770.64 $24,770.64
$27,273.00 $27,272.70 $27,272.73 $27,272.73 $27,272.73 $27,272.73 $27,272.73

$16,980.93 $16,981.14 $16,981.13 $16,981.13 $16,981.13 $16,981.13 $16,981.13

$19,625.73 $19,626.20 $19,626.17 $19,626.17 $19,626.17 $19,626.17 $19,626.17
$22,221.38 $22,222.29 $22,222.22 $22,222.22 $22,222.22 $22,222.22 $22,222.22
$24,769.14 $24,770.78 $24,770.63 $24,770.64 $24,770.64 $24,770.64 $24,770.64
$27,270.21 $27,272.98 $27,272.70 $27,272.73 $27,272.73 $27,272.73 $27,272.73
 12 13 14 15 16 17 18
$255,918.92 $249,744.20 $243,075.51 $235,873.32 $228,094.96 $219,694.32 $210,621.64
$26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23
$20,473.51 $19,979.54 $19,446.04 $18,869.87 $18,247.60 $17,575.55 $16,849.73
$6,174.72 $6,668.69 $7,202.19 $7,778.36 $8,400.63 $9,072.68 $9,798.50

$16,981.13 $16,981.13 $16,981.13 $16,981.13 $16,981.13 $16,981.13 $16,981.13

$19,626.17 $19,626.17 $19,626.17 $19,626.17 $19,626.17 $19,626.17 $19,626.17
$22,222.22 $22,222.22 $22,222.22 $22,222.22 $22,222.22 $22,222.22 $22,222.22
$24,770.64 $24,770.64 $24,770.64 $24,770.64 $24,770.64 $24,770.64 $24,770.64
$27,272.73 $27,272.73 $27,272.73 $27,272.73 $27,272.73 $27,272.73 $27,272.73

$16,981.13 $16,981.13 $16,981.13 $16,981.13 $16,981.13 $16,981.13 $16,981.13

$19,626.17 $19,626.17 $19,626.17 $19,626.17 $19,626.17 $19,626.17 $19,626.17
$22,222.22 $22,222.22 $22,222.22 $22,222.22 $22,222.22 $22,222.22 $22,222.22
$24,770.64 $24,770.64 $24,770.64 $24,770.64 $24,770.64 $24,770.64 $24,770.64
$27,272.73 $27,272.73 $27,272.73 $27,272.73 $27,272.73 $27,272.73 $27,272.73
 19 20 21 22 23 24 25
$200,823.14 $190,240.76 $178,811.79 $166,468.51 $153,137.76 $138,740.55 $123,191.56
$26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23
$16,065.85 $15,219.26 $14,304.94 $13,317.48 $12,251.02 $11,099.24 $9,855.32
$10,582.38 $11,428.97 $12,343.29 $13,330.75 $14,397.21 $15,548.99 $16,792.91

$16,981.13 $16,981.13 $16,981.13 $16,981.13 $16,981.13 $16,981.13 $16,981.13

$19,626.17 $19,626.17 $19,626.17 $19,626.17 $19,626.17 $19,626.17 $19,626.17
$22,222.22 $22,222.22 $22,222.22 $22,222.22 $22,222.22 $22,222.22 $22,222.22
$24,770.64 $24,770.64 $24,770.64 $24,770.64 $24,770.64 $24,770.64 $24,770.64
$27,272.73 $27,272.73 $27,272.73 $27,272.73 $27,272.73 $27,272.73 $27,272.73

$16,981.13 $16,981.13 $16,981.13 $16,981.13 $16,981.13 $16,981.13 $16,981.13

$19,626.17 $19,626.17 $19,626.17 $19,626.17 $19,626.17 $19,626.17 $19,626.17
$22,222.22 $22,222.22 $22,222.22 $22,222.22 $22,222.22 $22,222.22 $22,222.22
$24,770.64 $24,770.64 $24,770.64 $24,770.64 $24,770.64 $24,770.64 $24,770.64
$27,272.73 $27,272.73 $27,272.73 $27,272.73 $27,272.73 $27,272.73 $27,272.73
 26 27 28 29 30
$106,398.66 $88,262.32 $68,675.07 $47,520.85 $24,674.29
$26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23
$8,511.89 $7,060.99 $5,494.01 $3,801.67 $1,973.94
$18,136.34 $19,587.24 $21,154.22 $22,846.56 $24,674.29

$16,981.13 $16,981.13 $16,981.13 $16,981.13 $16,981.13

$19,626.17 $19,626.17 $19,626.17 $19,626.17 $19,626.17
$22,222.22 $22,222.22 $22,222.22 $22,222.22 $22,222.22
$24,770.64 $24,770.64 $24,770.64 $24,770.64 $24,770.64
$27,272.73 $27,272.73 $27,272.73 $27,272.73 $27,272.73

$16,981.13 $16,981.13 $16,981.13 $16,981.13 $16,981.13

$19,626.17 $19,626.17 $19,626.17 $19,626.17 $19,626.17
$22,222.22 $22,222.22 $22,222.22 $22,222.22 $22,222.22
$24,770.64 $24,770.64 $24,770.64 $24,770.64 $24,770.64
$27,272.73 $27,272.73 $27,272.73 $27,272.73 $27,272.73
 LOAN AMORTIZATION - BASIC
Inputs
Present Value $300,000.00
Interest Rate / year 8.00%
Number of Years 30

Output
Year 1 2 3 4
Beginning Principal Balance $300,000.00 $297,351.77 $294,491.68 $291,402.79
Payment $26,648.23 $26,648.23 $26,648.23 $26,648.23
Interest Component $24,000.00 $23,788.14 $23,559.33 $23,312.22
Principal Component $2,648.23 $2,860.09 $3,088.90 $3,336.01

Loan Amortization - Basic

Column
Column
D
C Column
E Column
F Column
G Column
H Column
I Column
J Column
K Column
L Column
MColumn
N Column
O Column
P Column
Q Column
R Column
S Column
T Column
UColu
V
100.00%
Column C Column
D
Column E Column
F Column
90.00% G Column
H Column
I Column
J K
Column L M
Column
80.00% Column N O
Column
Column P
Column Q R
Column
70.00% Column S Column T
Column U
60.00% Column V
Colu
50.00%
%

40.00%

30.00%

20.00%

10.00%

0.00%
Co Co Co Co Co Co C C Co Co Co Co Co Co Co Co Co Co Co Co C
lu lu lu lu lu lu olu olu lu lu lu lu lu lu lu lu lu lu lu lu lu
mn mn mn mn mn mn mn I mn J mn mn mn mn mn mn mn mn mn mn mn mn m
Years
ASIC

5 6 7 8 9 10 11
$288,066.78 $284,463.89 $280,572.77 $276,370.36 $271,831.76 $266,930.07 $261,636.25
$26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23
$23,045.34 $22,757.11 $22,445.82 $22,109.63 $21,746.54 $21,354.41 $20,930.90
$3,602.89 $3,891.12 $4,202.41 $4,538.60 $4,901.69 $5,293.82 $5,717.33

rtization - Basic
mn
Column
O Column
P Column
Q Column
R Column
S Column
T Column
U Column
V Column
WColumn
X Column
YColumn
ZColumn
AA
Column
AB
Column
AC
Column
AD
Column
AE AF

mn O
Column P
Column Q R
Column
Column S
Column T
Column U
Column V
Column W
Column X
Column Y
Column Z
Column AA
Column AB
Column AC
Column AD
Column AE
Column AF

o Co Co Co Co Co Co Co Co Co Co Co Co Co Co C Co Co
lu lu lu lu lu lu lu lu lu lu lu lu lu lu olu lu lu
n mn mn mn mn mn mn mn mn mn mn mn mn mn mn mn mn mn
Years
 12 13 14 15 16 17 18
$255,918.92 $249,744.20 $243,075.51 $235,873.32 $228,094.96 $219,694.32 $210,621.64
$26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23
$20,473.51 $19,979.54 $19,446.04 $18,869.87 $18,247.60 $17,575.55 $16,849.73
$6,174.72 $6,668.69 $7,202.19 $7,778.36 $8,400.63 $9,072.68 $9,798.50
 19 20 21 22 23 24 25
$200,823.14 $190,240.76 $178,811.79 $166,468.51 $153,137.76 $138,740.55 $123,191.56
$26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23
$16,065.85 $15,219.26 $14,304.94 $13,317.48 $12,251.02 $11,099.24 $9,855.32
$10,582.38 $11,428.97 $12,343.29 $13,330.75 $14,397.21 $15,548.99 $16,792.91
 26 27 28 29 30
$106,398.66 $88,262.32 $68,675.07 $47,520.85 $24,674.29
$26,648.23 $26,648.23 $26,648.23 $26,648.23 $26,648.23
$8,511.89 $7,060.99 $5,494.01 $3,801.67 $1,973.94
$18,136.34 $19,587.24 $21,154.22 $22,846.56 $24,674.29
 REAL AND INFLATION - GENERAL DISCOUNT RATE
(In Thousands of $)

Inputs
Preiod 0 1 2 3 4
Current Investments 100
Future Value of each Cash Flow 21.00 34.00 40.00 33.00
Inflation Rate 3.00% 2.80% 2.50% 2.20%
Real Discount Rate 5.00% 5.50% 6.00% 6.50%

Net Present Value using a Time Line

Preiod 0 1 2 3 4
Discount Rate 8.15% 8.45% 8.65% 8.84%
Cumulative Discount Factor 0.00% 8.15% 17.29% 27.44% 38.71%
Cash Flows $(100.00) $21.00 $34.00 $40.00 $33.00
Present Value of each Cash Flow $(100.00) $19.42 $28.91 $31.19 $23.51
Net Present Value $14.26
RATE

17.00
2.00%
6.50%

5
8.63%
50.68%
$17.00
$11.24
 REAL AND INFLATION - CONSTANT DISCOUNT RATE
(In Thousands of $)

Inputs
Inflation Rate 3.00%
Real Discount Rate 5.00%
Preiod 0 1 2 3 4
Current Investments 100
Future Value of each Cash Flow 21.00 34.00 40.00 33.00

Outputs
Discount Rate 8.15%

Net Present Value using a Time Line

Preiod 0 1 2 3 4
Cash Flows $(100.00) $21.00 $34.00 $40.00 $33.00
Present Value of each Cash Flow $(100.00) $19.42 $29.07 $31.62 $24.12
Net Present Value 15.72

Net Present Value Using the NPV Function 15.72

T RATE

17.00

5
$17.00
$11.49
 NET PRESENT VALUE - GENERAL DISCOUNT RATE
(In Thousands of $)

Inputs
Preiod 0 1 2 3 4
Current Investments 100
Future Value of each Cash Flow 21.00 34.00 40.00 33.00
Discount Rate 8.00% 7.60% 7.30% 7.00%

Net Present Value using a Time Line

Preiod 0 1 2 3 4
Cumulative Discount Factory 0 8.00% 16.21% 24.69% 33.42%
Cash Flows $(100.00) $21.00 $34.00 $40.00 $33.00
Present Value of each Cash Flow $(100.00) $19.44 $29.26 $32.08 $24.73
Net Present Value 17.42
RATE

17.00
7.00%

5
42.76%
$17.00
$11.91
 NET PRESENT VALUE - CONSTANT DISCOUNT RATE
(In Thousands of $)

Inputs
Discount Rate 8%
Preiod 0 1 2 3 4
Current Investments 100
Future Value of each Cash Flow 21.00 34.00 40.00 33.00

Net Present Value using a Time Line

Preiod 0 1 2 3 4
Cash Flows -100 21.00 34.00 40.00 33.00
Present Value of each Cash Flow -100.00 19.44 29.15 31.75 24.26
Net Present Value 16.17

Net Present Value using the NPV Function

Net Present Value 16.17
RATE

17.00

5
17.00
11.57
 ANNUITY - SYSTEM OF FOUR ANNUITY VARIABLES
Inputs
Payments 80
Discount Rate / Period 6%
Number of Periods 5
Present Value 336.99

Payments
Payments using the Formula 80
Payments using the PMT Function 80

Discount Rate/Period
Discount Rate/ Per Usion the RATE Function 6.00%

Number of Periods
Num of Periods using NPER Function 5

Present Value using a Time Line

Preiod 0 1 2 3 4
Cash Flows 0 80 80 80 80
Present Value of each Cash Flow 0.00 75.47 71.20 67.17 63.37
Present Value 336.99

Present Value using the formula

Present Value 336.99

Present Value using the FV Function

Present Value 336.99
ABLES

5
80
59.78
 ANNUITY - FUTURE VALUE
Inputs
Payments 80
Discount Rate / Period 6%
Number of Periods 5

Future Value using a Time Line

Preiod 0 1 2 3 4 5
Cash Flows 0 80 80 80 80 80
Future Value of each Cash Flow 0.00 101.00 95.28 89.89 84.80 80.00
Future Value 450.97

Future Value using the formula

Future Value 450.97

Future Value using the FV Function

Future Value 450.97
 ANNUITY - PRESENT VALUE
Inputs
Payments 80
Discount Rate / Period 6%
Number of Periods 5

Present Value using a Time Line

Preiod 0 1 2 3 4 5
Cash Flows 0 80 80 80 80 80
Present Value of each Cash Flow 0.00 75.47 71.20 67.17 63.37 59.78
Present Value 336.99

Present Value using the formula

Present Value 336.99

Present Value using the PV Function

Present Value 336.99
 SINGLE CASH FLOW - FUTURE VALUE
Inputs
Single Cash Flow 747.26
Discount Rate / Period 6%
Number of Periods 5

Future Value using a Time Line

Preiod 0 1 2 3 4 5
Cash Flows 747.26 0 0 0 0 0
Future Value of each Cash Flow 1000.00 0.00 0.00 0.00 0.00 0.00
Future Value 1000.00

Future Value using the formula

Future Value 1000.00

Future Value using the PV Function

Future Value 1000.00
 SINGLE CASH FLOW - PRESENT VALUE
Inputs
Single Cash Flow 1000
Discount Rate / Period 6%
Number of Periods 5

Present Value using a Time Line

Preiod 0 1 2 3 4 5
Cash Flows 0 0 0 0 0 1000
Present Value of each Cash Flow 0.00 0.00 0.00 0.00 0.00 747.26
Present Value 747.26

Present Value using the formula

Present Value 747.26

Present Value using the PV Function

Present Value 747.26