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1992-08-22
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█ W █ ║ ║ ╨ ╚══╝ ╨ ╚══╝ ║ ║
█ O █ ║ ║ 1 0 1 ║ ║
█ O █ ║ ╞═╩═╡ ╚═════╡ ║
█ L █ ║ Version 2.1 ║
█ A █ ╨ ╚═════╡
█ R █ AN AID FOR MAKING INTELLIGENT FINANCIAL DECISIONS
█ D █
█ █ CHARLTON WOOLARD - CopyRight 1989
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(Hit Any Key; "B" for Black/White Display)
█████████████████████ ACQUIRING ITEMS/LOANS/AMORTIZATION ███████████████████████
This option provides a comprehensive evaluation of a loan.
You are asked to input any 4 of the following 5 inputs:
Loan amount ? Rate ? Payment ? # payments per year ? Years ?
═══════════ ════ ═══════ ═══════════════════ ═════
I will calculate the missing input (Hit <RETURN> to skip an input).
In addition, you will be shown the complete amortization
schedule for the loan.
You may select any one of 5 different amortization schemes:
A) Conventional method
B) Sum-of-the-years digits (or Rule of 78)
C) Graduated Payments (pays interest first)
D) Interest only with balloon payment
E) Pay % of Outstanding Balance (Credit Card Scheme)
You may also analyze the effects of making higher payments.
████████████████████████████ ACQUIRING ITEMS/LOAN ██████████████████████████████
PLEASE RESPOND TO ANY 4 OF THE FOLLOWING 5 QUESTIONS:
(Hit <RETURN> to skip a question)
Loan amount being financed ?
Rate (%) ?
Payment amount ?
# of payments per year ?
Years ?
═══════════════════════════════════════════════════════
Loan amount being financed ? : 10,000
Rate (%) ? : 11
Payment amount ? :
# of payments per year ? : 12
Years ? : 4
══════════════════════════════════════════════════════════════════════════════
REGULAR PAYMENTS ARE = $ 258.46
TOTAL INTEREST = $ 2,405.85 Using The Conventional Amortization Method.
FINAL PAYMENT = $ 0.00 Using The Conventional Amortization Method.
██████████████████ ACQUIRING ITEMS/LOAN/CONVENTIONAL METHOD ████████████████████
LOAN SPECIFICS
══════════════════════════════════════════════════════════════════════════════
TERM OF LOAN = 4.0 YEAR(S)
TOTAL INTEREST = $ 2,405.85
TOTAL PAYMENTS = $ 12,405.85
PERIODIC PAYMENT = $ 258.46
FINAL PAYMENT = $ 258.23
PRESENT VALUE = $ 10,000.04
══════════════════════════════════════════════════════════════════════════════
██████████████████ ACQUIRING ITEMS/LOAN/CONVENTIONAL METHOD ████████████████████
PAYMENT PRINCIPAL INTEREST BALANCE CUM INTEREST
1 166.79 91.67 9833.21 91.67 ( 8/ 3/92)
2 168.32 90.14 9664.89 181.81 ( 9/ 2/92)
3 169.87 88.59 9495.02 270.40 (10/ 2/92)
4 171.42 87.04 9323.60 357.44 (11/ 1/92)
5 172.99 85.47 9150.61 442.91 (12/ 1/92)
6 174.58 83.88 8976.03 526.79 (12/31/92)
7 176.18 82.28 8799.85 609.07 ( 1/30/93)
8 177.79 80.67 8622.06 689.74 ( 3/ 1/93)
9 179.42 79.04 8442.64 768.78 ( 3/31/93)
10 181.07 77.39 8261.57 846.17 ( 4/30/93)
11 182.73 75.73 8078.84 921.90 ( 5/30/93)
12 184.40 74.06 7894.44 995.96 ( 6/29/93)
YEAR 1 : ANNUAL INTEREST = $ 995.96
OF 4.0 ANNUAL PRINCIPAL = $ 2,105.56
PERIODIC PAYMENT = $ 258.46
██████████████████ ACQUIRING ITEMS/LOAN/CONVENTIONAL METHOD ████████████████████
PAYMENT PRINCIPAL INTEREST BALANCE CUM INTEREST
37 231.66 26.80 2692.49 2255.51 ( 7/19/95)
38 233.78 24.68 2458.71 2280.19 ( 8/18/95)
39 235.92 22.54 2222.79 2302.73 ( 9/17/95)
40 238.08 20.38 1984.71 2323.11 (10/17/95)
41 240.27 18.19 1744.44 2341.30 (11/16/95)
42 242.47 15.99 1501.97 2357.29 (12/16/95)
43 244.69 13.77 1257.28 2371.06 ( 1/15/96)
44 246.93 11.53 1010.35 2382.59 ( 2/14/96)
45 249.20 9.26 761.15 2391.85 ( 3/15/96)
46 251.48 6.98 509.67 2398.83 ( 4/14/96)
47 253.79 4.67 255.88 2403.50 ( 5/14/96)
48 255.88 2.35 0.00 2405.85 ( 6/13/96)
YEAR 4 : ANNUAL INTEREST = $ 177.14
OF 4.0 ANNUAL PRINCIPAL = $ 2,924.15
PERIODIC PAYMENT = $ 258.46
FINAL PAYMENT = $ 258.23 ( 6/13/96)
██████████████████ ACQUIRING ITEMS/LOAN/CONVENTIONAL METHOD ████████████████████
1st PAYMENT vs RATE COMPARISONS
4.0 - YEAR LOAN AMOUNTS
RATES 10000 12000 14000 16000 18000
11.00% 258.46 310.15 361.84 413.54 465.23
11.25% 259.67 311.60 363.54 415.47 467.41
11.50% 260.89 313.07 365.25 417.42 469.60
11.75% 262.11 314.53 366.95 419.38 471.80
12.00% 263.34 316.01 368.68 421.34 474.01
12.25% 264.57 317.48 370.40 423.31 476.23
12.50% 265.80 318.96 372.12 425.28 478.44
12.75% 267.04 320.45 373.86 427.26 480.67
13.00% 268.27 321.92 375.58 429.23 482.89
13.25% 269.52 323.42 377.33 431.23 485.14
13.50% 270.76 324.91 379.06 433.22 487.37
13.75% 272.01 326.41 380.81 435.22 489.62
████████████████████ ACQUIRING ITEMS/LOAN PAYOFF STRATEGY ██████████████████████
This option accepts information of up to 15 loans, and provides
the fastest optimized pay-off strategy for the combined monthly
payment amount. In addition, you are allowed to enter either
a new (higher) amount, or new (lower) time period, and details
describing the effect of this change is provided.
You are asked to input the following 4 entries for each loan:
Loan amount ? Rate ? Payment ? Loan Type ?
═══════════ ════ ═══════ ═════════
First, all loans will be prioritized for pay-off emphasis.
Secondly, each monthly payment is distributed and applied so to
minimize interest payments.
Finally, a table showing the pay-off period for each loan is provided.
The analysis assumes all loans are active, payments and rates are
constant throughout the payment period, and the next payment is
due in one month. All excess payments are applied to the next loan.
████████████████████ ACQUIRING ITEMS/LOAN PAYOFF STRATEGY ██████████████████████
PAY-OFF PRIORITY:
OUTSTANDING ANN. MONTHLY LOAN % LINE OF
LOAN # BALANCE RATE PAYMENT TYPE INT/PYMT CREDIT
4 4599.00 8.50 % 200.00 RULE OF 78
1 10000.00 11.00 % 268.00 STANDARD
2 3456.00 12.00 % 56.00 REVOLVING 4000
3 5000.00 9.00 % 150.00 INT. ONLY
████████████████████ ACQUIRING ITEMS/LOAN PAYOFF STRATEGY ██████████████████████
CURRENT MULTI-LOAN ANALYSIS
══════════════════════════════════════════════════════════════════════════════
TIME TO PAY OFF ALL LOANS = 3.4 YEAR(S) (OR 41 MONTH(S))
TOTAL BALANCE = $ 23,055.00
COMBINED RATE (ALL LOANS) = 10.2 %
TOTAL INTEREST = $ 4,451.16
MINIMUM MONTHLY PAYMENT = $ 674.00
TOTAL PAYMENTS = $ 21,702.97
PRESENT VALUE OF PAYMENTS = $ 22,078.97
══════════════════════════════════════════════════════════════════════════════
Date of this report : AUGUST 21, 1992
Approximate pay-off date : JANUARY 23, 1996
████████████████████ ACQUIRING ITEMS/LOAN PAYOFF STRATEGY ██████████████████████
MULTI-LOAN OPTIMIZATION RESULTS
══════════════════════════════════════════════════════════════════════════════
TIME TO PAY OFF ALL LOANS = 2.8 YEAR(S) (SAVES 7 MONTH(S))
TOTAL BALANCE = $ 23,055.00
COMBINED RATE (ALL LOANS) = 10.2 %
TOTAL INTEREST = $ 3,672.10 (SAVES $ 779.06)
MINIMUM MONTHLY PAYMENT = $ 800.00
TOTAL PAYMENTS = $ 21,325.52
FINAL PAYMENT = $ -324.23 (ON LOAN 3: INT. ONLY)
══════════════════════════════════════════════════════════════════════════════
Date of this report : AUGUST 21, 1992
Approximate pay-off date : JUNE 24, 1995
████████████████████ ACQUIRING ITEMS/LOAN PAYOFF STRATEGY ██████████████████████
MULTI-LOAN EARLY PAY-OFF SCHEDULE
══════════════════════════════════════════════════════════════════════════════
LOAN # 1 $ 10,000.00 11.00 % STANDARD Paid in 2 YEAR(S) AND 5 MONTHS
LOAN # 2 $ 3,456.00 12.00 % REVOLVING Paid in 2 YEAR(S) AND 9 MONTHS
LOAN # 3 $ 5,000.00 9.00 % INT. ONLY Paid in 2 YEAR(S) AND 10 MONTHS
LOAN # 4 $ 4,599.00 8.50 % RULE OF 78 Paid in 1 YEAR(S) AND 4 MONTHS
══════════════════════════════════════════════════════════════════════════════
████████████████████ ACQUIRING ITEMS/LOAN PAYOFF STRATEGY ██████████████████████
MULTI-LOAN EARLY PAY-OFF SCHEDULE
══════════════════════════════════════════════════════════════════════════════
LOAN # 1 $ 10,000.00 11.00 % STANDARD Paid in 2 YEAR(S) AND 5 MONTHS
LOAN # 2 $ 3,456.00 12.00 % REVOLVING Paid in 2 YEAR(S) AND 9 MONTHS
LOAN # 3 $ 5,000.00 9.00 % INT. ONLY Paid in 2 YEAR(S) AND 10 MONTHS
LOAN # 4 $ 4,599.00 8.50 % RULE OF 78 Paid in 1 YEAR(S) AND 4 MONTHS
══════════════════════════════════════════════════════════════════════════════
ENTER NEW TIME TARGET IN MONTHS (add a "m" [i.e. "24m"]),
OR, ENTER NEW MONTHLY PAYMENT (or, hit <return> to exit) :
███████████████████████████ ACQUIRING ITEMS/LEASE ██████████████████████████████
When evaluating lease arrangements it is important to know
how much financing is being provided. This is the only way to
effectively compare lease arrangements. The lease arrangement
which provides the most financing is clearly the better choice.
This option uses lease payments to calculate the true value of the
lease and compares the NET LEASE VALUE with that of an EQUIVALENT
LOAN to determine if borrowing offers an advantage over leasing.
Obtaining a loan may be better if it provides more financing.
NOTE: To utilize this option you must first know your true
LEASE CASH OUTFLOW AMOUNTS (payments) for each payment period.
These are typically the tax shield of your payments, less the
payment amount, and less any lost depreciation tax shields.
You may simply hit <RETURN> to repeat entries and avoid retyping, or
add a "c" to your last number entry to repeat automatically for the
remainder of all payments.
███████████████████████████ ACQUIRING ITEMS/LEASE ██████████████████████████████
Interest rate (%) ? : 11
Tax rate (%) ? : 28
══════════════════════════════════════════════════════════════════════════════
The lease provides $ 4,900.00 of initial financing.
An equivalent loan provides $ 2,054.12 of initial financing.
The lease provides $ 2,845.88 more financing than an equivalent loan.
BOTTOM LINE : THE LEASE IS PROBABLY MORE ATTRACTIVE.
(Use Option A3 or B3-1 for Detailed Buy vs Lease Analysis.)
████████████████████████ ACQUIRING ITEMS/BUY vs RENT ███████████████████████████
This option compares the true NET ADVANTAGE OF A LEASE
to BUYING the same asset, over the life of the lease (in years).
Both the Financial Advantage (i.e. payments made) and the Operating
Advantage (i.e. cash flow, expense savings, etc.) are
provided. In addition, you may view a table detailing
the cash flow differences of BUYING vs RENTING.
████████████████████████ ACQUIRING ITEMS/BUY vs RENT ███████████████████████████
COMPARISON OF BUYING vs RENTING
AMOUNT FINANCED FOR PURCHASE $ 10000.00
AVG TAX DEDUCTIBLE RATE 0.280
INTEREST RATE 0.110
INVESTMENT RATE 0.060
AVG ANNUAL RENT INCREASE 0.020
PERIODIC RENT $ 300.00
EXPECTED ACTUAL SALVAGE $ 3500.00
EXPENSE OF ARRANGING LEASE $ 500.00
ANNUAL EXPENSE SAVING DUE TO LEASE $ 150.00
EXPECTED DURATION OF LEASE 6.0 YEARS
LIFE OF LOAN 5.0 YEARS
SENSITIVITY ANALYSIS ON "AMOUNT FINANCED"
WITH A RANGE OF 8000.000 TO 12000.000
████████████████████████ ACQUIRING ITEMS/BUY vs RENT ███████████████████████████
ANNUAL PRESENT
LOAN DEDUCTIBLE CASH FLOW VALUE OF
INTEREST INTEREST SAVINGS CASH FLOW
AT AT WITH DISC. AT
YEAR RENT 0.110 0.280 LEASE 0.060
1 3600 1099 308 -658 -619
2 3672 908 254 -104 -93
3 3745 694 194 -44 -37
4 3820 453 127 23 18
5 3897 182 51 99 74
6 3975 3 1 -3351 -2340
TOTAL 22709 3339 935 -4035 -2997
████████████████████████ ACQUIRING ITEMS/BUY vs RENT ███████████████████████████
══════════════════════════════════════════════════════════════════════════════
FINANCIAL ADVANTAGE OF LEASE $ -4,493.62
OPERATING ADVANTAGE OF LEASE $ -2,997.34
NET ADVANTAGE OF LEASE $ -7,490.96 (Excluding Downpayments)
══════════════════════════════════════════════════════════════════════════════
BUYING IS MORE ATTRACTIVE THAN LEASING.
══════════════════════════════════════════════════════════════════════════════
NOTE: VALUE OF LEASE = $ 11,927.07
████████████████████████ ACQUIRING ITEMS/BUY vs RENT ███████████████████████████
SENSITIVITY ANALYSIS ON "AMOUNT FINANCED"
══════════════════════════════════════════════════════════════════════════════
AMOUNT FINANCED = 8000.00
ANNUAL PRESENT
LOAN DEDUCTIBLE CASH FLOW VALUE OF
INTEREST INTEREST SAVINGS CASH FLOW
AT AT WITH DISC. AT
YEAR RENT 0.110 0.280 LEASE 0.060
1 3600 879 246 -596 -561
2 3672 727 203 -53 -47
3 3745 555 156 -6 -5
4 3820 362 101 49 38
5 3897 145 41 109 81
6 3975 3 1 -3351 -2340
TOTAL 22709 2671 748 -3848 -2834
████████████████████████ ACQUIRING ITEMS/BUY vs RENT ███████████████████████████
ANNUAL PRESENT
LOAN DEDUCTIBLE CASH FLOW VALUE OF
INTEREST INTEREST SAVINGS CASH FLOW
AT AT WITH DISC. AT
YEAR RENT 0.110 0.280 LEASE 0.060
1 3600 879 246 -596 -561
2 3672 727 203 -53 -47
3 3745 555 156 -6 -5
4 3820 362 101 49 38
5 3897 145 41 109 81
6 3975 3 1 -3351 -2340
TOTAL 22709 2671 748 -3848 -2834
NET ADVANTAGE OF LEASE = $ -9,612.05 BUY !
NOTE: VALUE OF LEASE = $ 9,779.06
███████████████ SAVING/PRESENT VALUE OF ANNUITIES-PERPETUITIES █████████████████
PRESENT VALUE OF ANNUITIES/PERPETUITIES
What is the total value of all periodic payments {annuity}
at a specific discount rate ?
What is the total value of payments made forever {perpetuity}
at a specific discount rate ?
═════════════════════════════════════════════════════════════
This option allows you to answer the above questions
regarding Annuities and Perpetuities.
███████████████ SAVING/PRESENT VALUE OF ANNUITIES-PERPETUITIES █████████████████
Annual rate (%) ? (include a "c" for continuous compounding): 9
Regular payment amount ? : 400
# of payments per year ? : 6
Total years ? (Hit <RETURN> if Forever) : 20
══════════════════════════════════════════════════════════════════════════════
THE PRESENT VALUE OF THE ANNUITY IS $ 22,199.38
█████████████████████ SAVING/SAVING FOR A CERTAIN AMOUNT ███████████████████████
SAVING FOR A CERTAIN AMOUNT
How long will it take to save a certain amount, given
specific deposits at a given interest rate ?
How much will I save if I make regular deposits of a
specific amount at a given interest rate ?
How much should I deposit at regular intervals, to save
a specific amount at a given interest rate ?
═════════════════════════════════════════════════════════════
This option assists you in meeting your saving goals by
providing the answers to the above questions. All deposits are equal.
█████████████████████ SAVING/SAVING FOR A CERTAIN AMOUNT ███████████████████████
Annual rate (%) ? (include a "c" for continuous compounding) : 10
# of payments per year ? : 12
PLEASE RESPOND TO 2 OF THE FOLLOWING 3 QUESTIONS:
TOTAL YEARS ? :
What is the targeted FUTURE AMOUNT ? :
What are the regular DEPOSIT AMOUNTS ? :
═════════════════════════════════════════════════════════════
TOTAL YEARS ? :
What is the targeted FUTURE AMOUNT ? : 100,000
What are the REGULAR DEPOSIT AMOUNTS ? : 50
══════════════════════════════════════════════════════════════════════════════
YOU MUST SAVE FOR 28 YEAR(S) AND 10 MONTH(S)
███████████████████ SAVING/SAVING FOR REGULAR WITHDRAWALS ██████████████████████
SAVING FOR REGULAR WITHDRAWALS
How long can I withdraw a certain amount, given
specific withdrawals at a given interest rate ?
How much should I invest to allow regular withdrawals of
a certain amount over time at a given interest rate ?
Given a certain amount, how much can I withdraw at regular
intervals over time at a given interest rate ?
═════════════════════════════════════════════════════════════
This option assists you in meeting your withdrawal objectives by
providing the answers to the above questions. All withdrawals are equal.
███████████████████ SAVING/SAVING FOR REGULAR WITHDRAWALS ██████████████████████
Annual rate (%) ? (include a "c" for continuous compounding) : 9
# of withdrawals per year ? : 12
PLEASE RESPOND TO 2 OF THE FOLLOWING 3 QUESTIONS:
TOTAL YEARS ? :
What is the INVESTMENT AMOUNT ? :
What are the desired regular WITHDRAWALS ? :
═════════════════════════════════════════════════════════════
TOTAL YEARS ? :
What is the INVESTMENT AMOUNT ? : 100,000
What are the desired regular WITHDRAWALS ? : 50
══════════════════════════════════════════════════════════════════════════════
YOU CAN WITHDRAW FOREVER
███████████████ BUSINESS DECISIONS/BUYING & SELLING A BUSINESS █████████████████
Firm "A" is considering buying firm "B" (both are public companies).
This option will assist you in determining the market values
of both firms, the cost to firm "A" of acquiring firm "B",
and the net gain or financial benefit of the acquisition.
You provide the stock price and share quantity of both firms.
A table of 9 scenarios is developed since firm "B" stock price
may fluctuate due to acquisition rumors. This table will display
a range of firm "B" stock prices, the effect this movement
has on the market value of firm "B", and the cost to firm "A"
should it continue to pursue the acquisition.
You may then select any one of the 9 price scenarios to produce
a second table which displays a range of BENEFIT values,
and the COST and NET GAIN for both methods (cash and common stock)
of acquiring firm "B".
███████████████ BUSINESS DECISIONS/BUYING & SELLING A BUSINESS █████████████████
Share price of COMPANY A = $ 50
Share price of COMPANY B = $ 34
Intrinsic value of COMPANY A = $ 50,000,000
Intrinsic value of COMPANY B = $ 34,000,000
REASONABLE CASH OFFER TO ACQUIRE/MERGE WITH COMPANY B = $ 42,500,000
NET COST TO ACQUIRE / MERGE WITH COMPANY B = $ 8,500,000
══════════════════════════════════════════════════════════════════════════════
FINANCED BY CASH BY COMMON STOCK
════════════════════════ ════════════════════════════
BENEFIT COST NET GAIN COST NET GAIN
$ 51,700,000 $ 6,800,000 $ 44,900,000 $ -10,245,945 $ 61,945,945
$ 59,775,000 $ 6,800,000 $ 52,975,000 $ -6,535,810 $ 66,310,810
$ 67,850,000 $ 6,800,000 $ 61,050,000 $ -2,825,675 $ 70,675,675
$ 75,925,000 $ 6,800,000 $ 69,125,000 $ 884,459 $ 75,040,540
$ 84,000,000 $ 6,800,000 $ 77,200,000 $ 4,594,594 $ 79,405,405
$ 92,075,000 $ 6,800,000 $ 85,275,000 $ 8,304,729 $ 83,770,270
$ 100,150,000 $ 6,800,000 $ 93,350,000 $ 12,014,864 $ 88,135,135
$ 108,225,000 $ 6,800,000 $ 101,425,000 $ 15,725,000 $ 92,500,000
$ 116,300,000 $ 6,800,000 $ 109,500,000 $ 19,435,135 $ 96,864,864
█████████ BUSINESS DECISIONS/BUSINESS FINANCIAL PERFORMANCE ANALYSIS ███████████
This option analyzes the financial performance of any public
company (firms that offer common shares of stock). The analyses
are based on rules-of-thumbs and generally accepted benchmarks.
You provide 15 entries which are typically found in annual reports.
From these entries, up to 28 financial ratios are provided.
The ratios are categorized by:
MANAGEMENT EFFECTIVENESS, OWNERS RETURN, and LENDERS RISKS.
At your option, an explanation of each ratio and/or a summary
of recommendations are also provided.
NOTE: You may direct the output to a printer, to a text file
entitled "BUS.TXT", or simply view on your screen. In addition,
your financial entries may be stored for future recall.
You may only analyze one firm at a time.
█████████ BUSINESS DECISIONS/BUSINESS FINANCIAL PERFORMANCE ANALYSIS ███████████
Company: ??
BALANCE SHEET INFORMATION
Current Assets _________________ Total Assets ________________
Current Liabilities ____________ Retain Earnings _____________
Total Shareholder Equity ____________
OPERATING STATEMENT INFORMATION
Revenues _______________________ Cost Of Goods Sold __________
Marketing Expenses _____________ Interest Expenses ___________
Earnings Before Taxes __________ Net Income __________________
OTHER INFORMATION
Share Price ____________________ Earnings Per Share __________
Operating Income _______________ Tax Rate ____________________
█████████████████ BUSINESS DECISIONS/INTERNAL RATE OF RETURN ███████████████████
This option determines the INTERNAL RATE OF RETURN and the
payback period at a specified discount rate. If the
investment is not recoverable, you are alerted to this fact.
You are asked to enter the initial investment, the discount
rate, and a stream of cash flows (if payments are inconsistent)
or the amount of fixed payments. If you enter the individual
cash flows, you can alter any entry if necessary.
NOTE: The periods are unspecified so if you want an annual IRR,
be sure to provide annual payments (vs monthly).
To end your stream of entries, simply hit <RETURN>.
██████████████ BUSINESS DECISIONS/INTERNAL RATE OF RETURN/FIXED ████████████████
Fixed payment amount : 10
Enter the total number of payments (MAX = 100 Payments) : 15
══════════════════════════════════════════════════════════════════════════════
IRR = -17.75 %
Investment is not recoverable when discounted at 9.00%
███████████████████ ACQUIRING ITEMS/CORPORATE BUY vs LEASE █████████████████████
This option compares the true NET ADVANTAGE OF A LEASE
to BUYING the same asset, over the life of the lease (in years).
You are asked to enter the PURCHASE parameters of the asset,
and the LEASING parameters of a lease contract. For the
purchase of the asset you are also allowed to structure a loan.
The financials of the purchase arrangement are compared with the
financials of the lease to provide "the bottom line" - the net
advantage of the lease. If the net advantage of the lease
is negative, the analysis favors buying.
Both the Financial Advantage (i.e. payments made) and the Operating
Advantage (i.e. cash flow, expense savings, etc.) are
provided. In addition, you may view a table detailing
the cash flow differences of BUYING vs LEASING.
███████████████████████ BUSINESS DECISIONS/BUY vs MAKE █████████████████████████
This option allows you to accurately determine whether it is better
to BUY or MAKE components ("components" is used in the generic
sense - it could be anything).
You provide cost and tax rate information, as well as investment,
depreciable life (max=35), salvage value, cost of capital (or
discount rate), and the yearly demand of your components.
The present value of the cost to make and the cost to buy
(including the effect of all taxes) are provided.
In addition, a table of your expenses and cash flows are
provided at your option.
NOTE: If you select Double-Declining-Balance or Sum-Of-The-Years-Digits as
your depreciation scheme, the depreciation method switches to
the straight-line method when switching is advantageous.
███████████████████████ BUSINESS DECISIONS/BUY vs MAKE █████████████████████████
════════════ CASH FLOWS ONLY (EXCLUDES INVESTMENTS) ════════════
---- IF BUYING ---- ---- IF MAKING ---- NET BUY CASH FLOW
YEAR EXPENSE CASH FLOW EXPENSE CASH FLOW ADVANTAGE
0 0 0 0 -3000 -3000
1 4500 3240 9900 6328 3088
2 4500 3240 7500 4600 1360
3 4500 3240 5100 2872 -368
4 4500 3240 2700 1144 -2096
5 4500 3240 -700 136 -3104
███████████████████████ BUSINESS DECISIONS/BUY vs MAKE █████████████████████████
THE PRESENT VALUE OF THE COST TO MAKE IS $ 15,793.77
THE PRESENT VALUE OF THE COST TO BUY IS $ 12,602.47
YOU SHOULD BUY THE COMPONENTS AT A SAVINGS OF $ 3,191.30
══════════════════════════════════════════════════════════════════════════════
██████████████████ BUSINESS DECISIONS/BREAK-EVEN ANALYSIS ████████████████████
This option allows you to quickly assess how many units you
should sell in order to recover your cost (i.e. break-even).
A 2-column table is provided that illustrates your UNIT and TOTAL VOLUME
sales, variable cost, contribution margins, operating income
(income before expenses are paid), and break-even (units and sales).
In addition, your degree of operating leverage is computed. Operating
leverage reflects the amount your income changes for every %
change in sales.
██████████████████ BUSINESS DECISIONS/BREAK-EVEN ANALYSIS ████████████████████
Selling price of the unit : 45
Total fixed cost (usually much larger than variable cost) : 3,000
# of units sold : 19
# of units produced : 20
Variable cost per unit : 20
Your desired [gross] profit impact (in $) : 10,000
UNIT TOTAL
SALES = $ 45.00 $ 855.00
VARIABLE COST = $ 20.00 $ 400.00
CONTRIBUTION = $ 23.95 $ 455.00
OPERATING INCOME = $ -133.95 $ -2,545.00
BREAK-EVEN (UNITS) = - 126
BREAK_EVEN (SALES) = $ 178.95 $ 3,400.00
DEGREE OF OPER. LEV. = - -0.34
* At a break-even of 126 units, every % change
in sales effectively changes operating income by -0.34 % .
* Required unit volume for gross profit of $ 10,000.00 is 543 units.
███████████████████████████████ INSURANCE/TERM █████████████████████████████████
TERM INSURANCE
TERM INSURANCE protects you for only a specified period, or term - usually
5, 10, 20 years. Term insurance pays a benefit only if you die during
the period covered. The insurance stops when you stop making
payments or when the specified term expires.
CHARACTERISTICS:
. Low initial premiums
. Protection for a specified period
. Usually renewable
. No cash value
. Premium rises with each new term
BEST SUITED FOR/WHEN:
. Buyer wants consistent and low payments
. Buyer is not concerned with cash value or investment value
. Buyer wants coverage only for a fixed period of time
███████████████████████████████ INSURANCE/TERM █████████████████████████████████
Does TERM INSURANCE truly meet my objectives ?
Should I use my premium payment dollars differently ?
Is TERM INSURANCE really worth it to me ?
═════════════════════════════════════════════════════════════════════
This option helps you to address the above questions by providing some
facts on comparable loan and savings programs.
In addition, you may view a table that displays, for each
additional year of living, the present cash value of the policy
and the net advantage of both a loan and comparable savings.
███████████████████████████████ INSURANCE/TERM █████████████████████████████████
PRESENT PRESENT NET SAVINGS NET LOAN
YEAR OF CUMM. CASH CUMM. VALUE ADVANTAGE ADVANTAGE
ADDITIONAL ANNUAL VALUE OF ANNUAL OF OVER OVER
LIVING PYMNTS INSURANCE SAVINGS LOAN INSURANCE INSURANCE
────── ────── ───────── ──────── ──────── ─────────── ─────────
0 0 0 0 6532 0 6532
1 1200 0 1200 6271 1200 6271
2 2400 0 2472 6020 2472 6020
3 3600 0 3820 5779 3820 5779
4 4800 0 5250 5548 5250 5548
5 6000 0 6765 5326 6765 5326
6 7200 0 8370 5113 8370 5113
7 8400 0 10073 4908 10073 4908
8 9600 0 11877 4712 11877 4712
9 10800 0 13790 4524 13790 4524
10 12000 0 15817 4343 15817 4343
████████████████████████████ INSURANCE/WHOLE LIFE ██████████████████████████████
WHOLE LIFE INSURANCE
WHOLE LIFE is the most common type of insurance. You are insured as
long as you make payments - usually your whole life (or to age 100).
Whole Life accumulates "CASH VALUE" which you can use in a variety of ways.
You may borrow it, use as collateral for future payments, or withdraw it.
CHARACTERISTICS:
. Protection for life
. Fixed premiums with growing cash value
. More expensive than Term
. Flexible usage of cash value (i.e. tax free loans)
. Available as UNIVERSAL, VARIABLE and ADJUSTABLE LIFE
BEST SUITED FOR/WHEN:
. Buyer who is concerned about increases in premium
. Buyer who wants Life Insurance for whole life
. Buyer who is looking for investment benefits from insurance
████████████████████████████ INSURANCE/WHOLE LIFE ██████████████████████████████
Does WHOLE LIFE INSURANCE truly meet my objectives ?
Should I use my premium payment dollars differently ?
Is WHOLE LIFE INSURANCE really worth it to me ?
When is the best time to cancel this insurance ?
═════════════════════════════════════════════════════════════════════
This option helps you to address the above questions by providing some
facts on comparable loan and savings programs.
In addition, you may view a table that displays, for each
additional year of living, the present cash value of the policy
and the net advantage of both a loan and comparable savings.
████████████████████████████ INSURANCE/WHOLE LIFE ██████████████████████████████
PRESENT PRESENT NET SAVINGS NET LOAN
YEAR OF CUMM. CASH CUMM. VALUE ADVANTAGE ADVANTAGE
ADDITIONAL ANNUAL VALUE OF ANNUAL OF OVER OVER
LIVING PYMNTS INSURANCE SAVINGS LOAN INSURANCE INSURANCE
────── ────── ───────── ──────── ──────── ─────────── ─────────
0 0 15000 0 6475 -15000 -8525
1 1200 14558 1200 6280 -13358 -8277
2 2400 14129 2472 6092 -11657 -8037
3 3600 13712 3820 5909 -9892 -7803
4 4800 13308 5250 5732 -8058 -7576
5 6000 12915 6765 5560 -6151 -7355
6 7200 12535 8370 5393 -4164 -7142
7 8400 12165 10073 5231 -2093 -6934
8 9600 11806 11877 5074 70 -6732
9 10800 11458 13790 4922 2331 -6536
10 12000 11121 15817 4775 4696 -6346
███████████████████████ INSURANCE/LIMITED PAYMENT LIFE █████████████████████████
LIMITED PAYMENT LIFE INSURANCE
LIMITED PAYMENT LIFE is similar to Whole Life except payments are made
only as long as you specify. The insurance, however, covers you for
your whole life and accumulates "CASH VALUE" which you may access.
You may borrow it, use as collateral for future payments, or withdraw it.
CHARACTERISTICS:
. Protection for life, even after payments stop
. Fixed premiums with growing cash value
. More expensive than ordinary whole life or term
. Flexible usage of cash value (i.e. tax free loans)
. Available as universal, variable and adjustable life
BEST SUITED FOR/WHEN:
. Buyer who is NOT concerned with expensive premiums
. Buyer who wants Life Insurance for whole life but can pay-off
. Buyer who is looking for investment benefits from insurance
████████████████████████████ INSURANCE/ENDOWMENT ███████████████████████████████
ENDOWMENT INSURANCE
ENDOWMENT INSURANCE is a combination of limited payment and an annuity that
endows or begins payment at a specified period (i.e. at age 65).
Endowment insurance is very flexible and accumulates CASH VALUE rapidly.
Payments can be a lump sum or set monthly amounts.
CHARACTERISTICS:
. Most expensive
. Protection for a specific period which usually extends after death
. Most flexible - policy can be tailored to coincide with future events
. Rapid cash accumulation
. Similar to social security
BEST SUITED FOR/WHEN:
. Buyer wants to use insurance as a retirement plan
. Buyer is not concerned with high premium costs
. Buyer wants cash paid in an annuity and cash paid upon death
