Microsoft Corporation Profitability Anaysis

(Millions of Dollars)
2018 to 2023
2023 2022 2021 2020 2019 2018
Sales 28,365.00 25,296.00 22,956.00 19,747.00 15,262.00 11,936.00
Net Income 7,829.00 7,346.00 9,421.00 7,785.00 4,490.00 3,454.00
Net Profit Margin 27.60% 29.04% 41.04% 39.42% 29.42% 28.94%
Sales Growth 12.13% 10.19% 16.25% 29.39% 27.87%
Net Income Growth 106.58% 77.97% 121.01% 173.39% 129.99%

CAGR Sales 17.51% #NAME?

CAGR Net Income 17.78% #NAME?

Annual Sales vs Net Income Annual Sales vs Net Inco

30,000.00

25,000.00

20,000.00

15,000.00

10,000.00

5,000.00

-
2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022

Sales Net Income Sales Net Income

*net profit margin (%) = net income / sales

*pay attention to the order of year, now to then or then to now
*sales growth (%) = (present - past) / past OR (present / past) - 1
that is from adapting (ending / beginning) - 1
*net income growth (%) = present / past
*cagr = geomean for net income = geomean - 1
*fame_cagr -> use sales / net income data, not rate

*to order the year from then to now -> + -> axes -> more option -> categories in reverse order on
ual Sales vs Net Income
30,000.00

25,000.00

20,000.00

15,000.00

10,000.00

5,000.00

-
2020 2021 2022 2023

Sales Net Income

 GEC
Common-Size Income Statement
For the Year Ended Dec. 31,2023
2023 2022
Sales $ 3,850,000.00 $ 3,432,000.00
Cost of Goods Sold $ 3,250,000.00 $ 2,864,000.00
Gross Profit $ 600,000.00 $ 568,000.00
Selling and G&A Expenses $ 330,300.00 $ 240,000.00
Fixed Expenses $ 100,000.00 $ 100,000.00
Depreciation Expense $ 20,000.00 $ 18,900.00
EBIT $ 149,700.00 $ 209,100.00
Interest Expense $ 76,000.00 $ 62,500.00
Earnings Before Taxes $ 73,700.00 $ 146,600.00
Taxes @ 40% $ 29,480.00 $ 58,640.00
Net Income $ 44,220.00 $ 87,960.00

GEC
Common-Size Income Statement
For the Year Ended Dec. 31,2023
2023 2022
Sales 100.00% 100.00%
Cost of Goods Sold 84.42% 83.45%
Gross Profit 15.58% 16.55%
Selling and G&A Expenses 8.58% 6.99%
Fixed Expenses 2.60% 2.91%
Depreciation Expense 0.52% 0.55%
EBIT 3.89% 6.09%
Interest Expense 1.97% 1.82%
Earnings Before Taxes 1.91% 4.27%
Taxes @ 40% 0.77% 1.71%
Net Income 1.15% 2.56%

*percentage in terms of sale

 GEC
Common-Size Balance Statement
As of Dec. 31,2023
Assets 2023 2022
Cash and Equivalents $ 52,000.00 $ 57,600.00
Accounts Receivable $ 402,000.00 $ 351,200.00
Inventory $ 836,000.00 $ 715,200.00
Total Current Assets $ 1,290,000.00 $ 1,124,000.00
Plan & Equipment $ 527,000.00 $ 491,000.00
Accumulated Depreciation $ 166,200.00 $ 146,200.00
Net Fixed Assets $ 360,800.00 $ 344,800.00
Total Assets $ 1,650,800.00 $ 1,468,800.00

Liabilities and Owner's Equity

Accounts Payable $ 175,200.00 $ 145,600.00
Short term Notes Payable $ 225,000.00 $ 200,000.00
Other Current Liabilities $ 140,000.00 $ 136,000.00
Total Current Liabilities $ 540,200.00 $ 481,600.00
Long Term Debt $ 424,610.00 $ 323,430.00
Total Liabilities $ 964,810.00 $ 805,030.00
Common Stock $ 460,000.00 $ 460,000.00
Retained Earnings $ 225,990.00 $ 203,770.00
Total Shareholder's Equity $ 685,990.00 $ 663,770.00
Total Liabilities and Owner's Equity $ 1,650,800.00 $ 1,468,800.00

Sanity Check OK OK

*be careful when want to sum, make sure year isn't included, whether text format or not CHECK to be safe
*be careful what is being asked, net fixed asset = fixed asset - its depre
*sanity check -> use IF formula, the condition for text remember to use "…"
 GEC
Common-Size Balance Statement
As of Dec. 31,2023
Assets 2023 2022
Cash and Equivalents 3.15% 3.92%
Accounts Receivable 24.35% 23.91%
Inventory 50.64% 48.69%
Total Current Assets 78.14% 76.53%
Plan & Equipment 31.92% 33.43%
Accumulated Depreciation 10.07% 9.95%
Net Fixed Assets 21.86% 23.47%
Total Assets 100.00% 100.00%

Liabilities and Owner's Equity

Accounts Payable 10.61% 9.91%
Short term Notes Payable 13.63% 13.62%
Other Current Liabilities 8.48% 9.26%
Total Current Liabilities 32.72% 32.79%
Long Term Debt 25.72% 22.02%
Total Liabilities 58.44% 54.81%
Common Stock 27.87% 31.32%
Retained Earnings 13.69% 13.87%
Total Shareholder's Equity 41.56% 45.19%
Total Liabilities and Owner's Equity 100.00% 100.00%

Sanity Check OK OK

ormat or not CHECK to be safe

 GEC
Cash-Flow Statement
For the Year Ended Dec. 31,2023
Cash-Flow from Operations
Net Income 44,220.00
Depreciation Expense 20,000.00
Change in Accounts Receivable (50,800.00)
Change in Inventories (120,800.00)
Change in Accounts Payable 29,600.00
Change in Other Current Liabilities 4,000.00
Total Cash-Flows from Operations (73,780.00)
Cash-Flow from Investing
Change in Plant & Equipment (36,000.00)
Total Cash-Flows from Investing (36,000.00)
Cash-Flows from Financing
Change in Short-term Notes Payable 25,000.00
Change in Long-term Debt 101,180.00
Change in Common Stock -
Cash Dividends Paid to Shareholders (22,000.00)
Total Cash-Flows from Financing 104,180.00
(5,600.00)
Net Change in Cash Balance (5,600.00)

*pay attention to the year because need to extract data

*depre exp is NON CASH, so we ADD back in cf statement
*pay attention to the year order to calculate change = present - past,
then REMEMBER the effect on cash + or -
> A/R = < cash = REVERSE
> Inventory or PPE = buy, < cash = REVERSE
> A/P = borrow, > cash = NO NEED
> other lia and notes or debts = > source of cash on borrow basis
*cash dividends paid to SH -> net income of the year - change in R/E, now since we give out money, make the amount -
 n borrow basis
oney, make the amount -
 GEC
Ratio Analysis for 2022 and 2023
Industry
Ratio 2023 2022 Analysis
2023
Liquidity Ratios
Current 2.70 2.39 2.33 Ok
Quick 1.00 0.84 0.85 Bad
Efficiency Ratios
Inventory Turnover 7.00 3.89 4.00 Bad
A/R Turnover 10.70 9.58 9.77 Bad
Average Collection Period 33.64 37.59 36.84 Bad
Fixed Asset Turnover 11.20 10.67 9.95 Ok
Total Asset Turnover 2.60 2.33 2.34 Bad
Leverage Ratios
Total Debt Ratio 50.00% 58.44% 54.81% Bad
Long-term Debt Ratio (LTD ratio) 20.00% 25.72% 22.02% Bad
LTD to Total Capitalization 28.57% 38.23% 32.76% Bad
Debt to Equity 1 1.41 1.21 Bad
LTD to Equity 40.00% 61.90% 48.73% Bad
Coverage Ratios
Times Interest Earned 2.50 1.97 3.35 Bad
Cash Coverage Ratio 2.80 2.23 3.65 Bad
Profitability Ratios
Gross Profit Margin 17.50% 15.58% 16.55% Bad
Operating Profit Margin 6.25% 3.89% 6.09% Bad
Net Profit Margin 3.50% 1.15% 2.56% Bad
Return on Total Assets 9.10% 2.68% 5.99% Bad
Return on Equity 18.20% 6.45% 13.25% Bad
Return on Common Equity 18.20% 6.45% 13.25% Bad

DuPont ROE 0.064462 0.132516

*current liquidity ratio = total current asset / total current lia

*quick liquidity ratio = (cash and equivalent + A/R) / total current lia

*inventory turnover = COGS / inventory

*A/R turn over = sales / A/R
*av collection period = A/R / (sales/360)
*fixed asset turnover = sales / net fixed asset
*total asset turnover = sales / total asset

*total debt ratio = total lia / total asset

*ltd ratio = ltd / total asset
*ltd to total capitalisation = ltd / (ltd + total SH equity)
*debt to equity = total lia / total SH equity
*ltd to equity = ltd / total SH equity

*times interest earned = EBIT / interest expense

*cash coverage ratio = (depre exp + EBIT) / int exp
*gross profit margin = gross profit / sales
*operating profit margin = EBIT / sales
*net profit margin = net income / sales
*return on total asset = net income / total asset
*return on equity and return common equity = net income / total SH equity

*dupont ROE = ((net income / sales) * total asset turnover) / (1 - total debt ratio)

*REVERSE sign for IF = all leverage ratio, and efficiency ratio -> av collection period
 GEC
Economic Profit Calculations
2023 2022
Tax Rate 40% 40%
NOPAT 89,820 125,460
Total Operating Capital 1,335,600 1,187,200
After-tax Cost of Capital 13% 13%
Dollar Cost of Capital 173,628 154,336
Economic Profit (83,808) (28,876)

*NOPAT = EBIT * (1 - tax rate)

*total operating cap = (current asset + net fix asset) - (current lia - notes payable)
*dollar cost of cap = (total operating cap * after tax cost of cap)
*econ profit = NOPAT - dollar cost of cap
 GEC
Pro-Forma Income Statement
As of Dec. 31,2024
2024* 2024% 2023 2023%
Sales $ 4,300,000.00 100.00% $ 3,850,000.00 100.00%
Cost of Goods Sold $ 3,609,107.56 83.93% $ 3,250,000.00 84.42%
Gross Profit $ 690,892.44 16.07% $ 600,000.00 15.58%
Selling and G&A Expenses $ 334,802.90 7.79% $ 330,300.00 8.58%
Fixed Expenses $ 100,000.00 2.33% $ 100,000.00 2.60%
Depreciation Expense $ 25,000.00 0.58% $ 20,000.00 0.52%
EBIT $ 231,089.54 5.37% $ 149,700.00 3.89%
Interest Expense $ 76,004.37 1.77% $ 76,000.00 1.97%
Earnings Before Taxes $ 155,085.17 3.61% $ 73,700.00 1.91%
Taxes @ 40% $ 62,034.07 1.44% $ 29,480.00 0.77%
Net Income $ 93,051.10 2.16% $ 44,220.00 1.15%

Notes
Tax Rate 40%
Additional Depreciation $ 5,000
Interest Expense 11.70%

*to find this year COGS, GP, EXP = sales this year * average (% … prev year and % ... 2 years ago)

*fix exp = same

*depre exp = prev year + additional depre
*int exp = (ltd + short term notes payable last year) * int exp % ASSUMING he said no changes
*taxable income = remember * with given
*the rest = manual
 * Forecasted
2022 2022%
$ 3,432,000.00 100.00%
$ 2,864,000.00 83.45%
$ 568,000.00 16.55%
$ 240,000.00 6.99%
$ 100,000.00 2.91%
$ 18,900.00 0.55%
$ 209,100.00 6.09%
$ 62,500.00 1.82%
$ 146,600.00 4.27%
$ 58,640.00 1.71%
$ 87,960.00 2.56%
 GEC
Pro-Forma Balance Statement
As of Dec. 31,2023
Assets 2024* 2024% 2023
Cash and Equivalents 52,000.00 2.89% 52,000.00
Accounts Receivable 444,505.16 24.73% 402,000.00
Inventory 914,899.10 50.91% 836,000.00
Total Current Assets 1,411,404.26 78.53% 1,290,000.00
Plan & Equipment 577,000.00 32.11% 527,000.00
Accumulated Depreciation 191,200.00 10.64% 166,200.00
Net Fixed Assets 385,800.00 21.47% 360,800.00
Total Assets 1,797,204.26 100.00% 1,650,800.00

Liabilities and Owner's Equity

Accounts Payable 189,051.08 10.52% 175,200.00
Short term Notes Payable 225,000.00 12.52% 225,000.00
Other Current Liabilities 163,379.95 9.09% 140,000.00
Total Current Liabilities 577,431.04 32.13% 540,200.00
Long Term Debt 462,732.12 25.75% 424,610.00
Total Liabilities 1,040,163.16 57.88% 964,810.00
Common Stock 460,000.00 25.60% 460,000.00
Retained Earnings 297,041.10 16.53% 225,990.00
Total Shareholder's Equity 757,041.10 42.12% 685,990.00
Total Liabilities and Owner's Equity 1,797,204.26 100.00% 1,650,800.00

Discretionary Financing Needed $ -

Total Accumulated DFN

Notes
Net Addition to Plant & Equipment $ 50,000.00
Life of New Equipment in Years $ 10.00
New Depreciation (Straight Line) $ -
Iteration $ - Iteration is OFF =IF(B33=0;"Iteration is OFF";"Iteration is ON")

*cash this year = same as last year

*A/R this year = sales forecast * average (A/R last year / sales last year and same case for 2 years ago)
*inventory = drag from A/R
*total current asset = sum, BECAREFUL don’t include the year
*ppe = last year + addition given
*accu depre = last year + depre exp forecast
*net fixed asset = ppe - accu depre
*total asset = total current asset + net fix asset

*A/P and other current lia = use the formula for A/R
*short term notes payable this year, common stock (BUT CHECK 1st) = same last year
*ltd = cell + discretionary financing needed
*total lia = current lia + ltd
*R/E this year = R/E last year + net income forecast + cash flow dividend (negative amount)
*total SH equity = common stock + R/E
ment
*Forecasted
2023% 2022 2022%
3.15% 57,600.00 3.92%
24.35% 351,200.00 23.91%
50.64% 715,200.00 48.69%
78.14% 1,124,000.00 76.53%
31.92% 491,000.00 33.43%
10.07% 146,200.00 9.95%
21.86% 344,800.00 23.47%
100.00% 1,468,800.00 100.00%

10.61% 145,600.00 9.91%

13.63% 200,000.00 13.62%
8.48% 136,000.00 9.26%
32.72% 481,600.00 32.79%
25.72% 323,430.00 22.02%
58.44% 805,030.00 54.81%
27.87% 460,000.00 31.32%
13.69% 203,770.00 13.87%
41.56% 663,770.00 45.19%
100.00% 1,468,800.00 100.00%

B33=0;"Iteration is OFF";"Iteration is ON")

ase for 2 years ago)

 GEC
Cash Budget
For the Period June to September 2023
April May June
Expected Sales $ 291,000 $ 365,000 $ 387,000
Cash Collections
Within the Month 40% $ 116,400 $ 146,000 $ 154,800
1 Following Month 45% $ 130,950 $ 164,250
2 Following Months 15% $ 43,650
Total Collections $ 362,700
Purchase 50% $ 182,500 $ 193,500 $ 164,500
Payments:
1 Following Month 60% $ 109,500 $ 116,100
2 Following Months 40% $ 73,000
Inventory Payments $ 189,100

Collections $ 362,700
Less Disbursements
Inventory Payments $ 189,100
Wages 20% $ 58,200 $ 73,000 $ 77,400
Lease Payments $ 10,000 $ 10,000 $ 10,000 $ 10,000
Interest June & September $ 30,000
Dividend (Common) June $ 50,000
Taxes June & September $ 25,000
Capital Outlays July
Total Disbursements $ 68,200 $ 83,000 $ 381,500

Beginning Cash Balance $ 20,000

Total Collections - Total Disbursements $ (18,800)
Unadjusted Cash Balance $ 20,000 $ 1,200
To borrow or to not borrow ? No Need Borrow
Current Borrowing $ - $ 13,800
Ending Cash Balance $ 20,000 $ 15,000
Cummulative Borrowing $ - $ 13,800

Notes
Minimum acceptable cash $ 15,000

*cash collections in this case -> collect 40% cash from the month' sales, 60% remain split (new 100%)
45% (75/100) collect in the month after sales, the rest in 2 months after sales (1-sum)

*purchase in this case -> how much to buy is 50% of next month' expected sales,
pay 60% in the month after purchase, the rest in 2 months after

*follow the given instruction

*unadjusted cash balance = beginning cash balance + (total collection - total disbursement)
*current borrowing -> 1st check the min acceptable cash, then use IF and if value of cash balance is more, then leave false bla
*ending cash balance = unadjusted cash balance + current borrowing
*cummulative = sum only that cell and 1st is $ and use :
er 2023
July August September October
$ 329,000 $ 238,000 $ 145,000 $ 92,000

$ 131,600 $ 95,200 $ 58,000 $ 36,800

$ 174,150 $ 148,050 $ 107,100 $ 65,250
$ 54,750 $ 58,050 $ 49,350 $ 35,700
$ 360,500 $ 301,300 $ 214,450 $ 137,750
$ 119,000 $ 72,500 $ 46,000

$ 98,700 $ 71,400 $ 43,500 $ 27,600

$ 77,400 $ 65,800 $ 47,600 $ 29,000
$ 176,100 $ 137,200 $ 91,100 $ 56,600

$ 360,500 $ 301,300 $ 214,450 $ 137,750

$ 176,100 $ 137,200 $ 91,100 $ 56,600

$ 65,800 $ 47,600 $ 29,000 $ 18,400
$ 10,000 $ 10,000 $ 10,000 $ 10,000
$ 30,000

$ 25,000
$ 200,000
$ 451,900 $ 194,800 $ 185,100 $ 85,000

$ 15,000 $ 15,000 $ 121,500 $ 150,850

$ (91,400) $ 106,500 $ 29,350 $ 52,750
$ (76,400) $ 121,500 $ 150,850 $ 203,600
Borrow No Need No Need No Need
$ 91,400 $ - $ - $ -
$ 15,000 $ 121,500 $ 150,850 $ 203,600
$ 105,200 $ 105,200 $ 105,200 $ 105,200

is more, then leave false blank

Year Sales Cost of Goods
2019 1,890,532.00 1,570,200.00
2020 2,098,490.00 1,695,694.00
2021 2,350,308.00 1,992,400.00
2022 3,432,000.00 2,864,000.00
2023 3,850,000.00 3,250,000.00
2024 4,299,999.80
2025 4,825,244.40
2026 5,350,489.00

Intercept (63,680.82)
Slope 0.86

SUMMARY OUTPUT
Regression Statistics
Multiple R 0.999143048555668
R Square 0.998286831477114
Adjusted R Square 0.997715775302819
Standard Error 35523.0765793694
Observations 5

ANOVA
df SS MS F
Regression 1 2205960110240 2.20596E+12 1748.1412099415
Residual 3 3785666908.9912 1261888969.7
Total 4 2209745777148.8

Coefficients Standard Error t Stat P-value

Intercept -63680.8247051621 58134.676000408 -1.0954017307 0.3534037380977
Sales 0.858264069920177 0.0205273400298 41.810778634 3.0110110325E-05

RESIDUAL OUTPUT
Observation Predicted Cost of Goods Residuals
1 1558894.86392917 11305.136070829
2 1737377.74338163 -41683.74338163
3 1953504.08494079 38895.91505921
4 2881881.46326089 -17881.46326089
5 3240635.84448752 9364.1555124791

*variables -> X = independent, Y = dependent

*regression -> X = sales, Y = COGS
CHECK if label included and CLICK on residual
Significance F
3.011011E-05

Lower 95% Upper 95% Lower 95,0% Upper 95,0%

-248691.30955 121329.66014 -248691.30955 121329.66014
0.79293691249 0.9235912274 0.7929369125 0.9235912274
 GEC
Income Statement
For year ended Dec. 31,2023
2023 2024 2025 2026
Sales $ 2,500,000.00 $ 2,750,000.00 $ 3,025,000.00 $ 3,327,500.00
Variable Costs 60% $ 1,500,000.00 $ 1,650,000.00 $ 1,815,000.00 $ 1,996,500.00
Fixed costs $ 400,000.00 $ 400,000.00 $ 400,000.00 $ 400,000.00
EBIT $ 600,000.00 $ 700,000.00 $ 810,000.00 $ 931,000.00
Interest Expense $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00
EBT $ 500,000.00 $ 600,000.00 $ 710,000.00 $ 831,000.00
Taxes @ 40% $ 200,000.00 $ 240,000.00 $ 284,000.00 $ 332,400.00
Net Income $ 300,000.00 $ 360,000.00 $ 426,000.00 $ 498,600.00
Preferred Dividends $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00
Net income available to common $ 200,000.00 $ 260,000.00 $ 326,000.00 $ 398,600.00
Common shares outstanding $ 1,000,000.00 $ 1,000,000.00 $ 1,000,000.00 $ 1,000,000.00
Earnings per share (EPS) $ 0.20 $ 0.26 $ 0.33 $ 0.40

Assumptions
Price per Unit $ 16.00
Unit Sales $ 156,250.00
Target EBIT $ 800,000.00
Unit Sales Growth 10%
Var $ 9.60

Operating Break-even Point (Units) 62,500

Operating Break-even Point ($) $ 1,000,000.00
Total Break-even Point (Units)
Units to Meet EBIT Target

%Change in Sales from Prior Year 10% 10% 10%

%Change in EBIT from Previous Year 17% 16% 15%
%Change in EPS from Previous Year 30% 25% 22%

2023 2024 2025 2026

Degree of operating leverage 1.67 1.57 1.49 1.43
Degree of financial leverage 1.20 1.17 1.14 1.12
Degree of combined leverage 2.00 1.83 1.70 1.60

*new sales by growth assumption = sales prev year * (1 + growth rate)

*EBIT = sales - (var cost + fix cost)
*EBT = EBIT - int exp
*EPS = net income avail / common shares outstanding

*change in sales from prior year = sales of the year / sales prev year - 1
*same pattern for the rest

*DOL = (sales - var) / EBIT

*DOFL = EBIT / (EBT - (pref div / (1 - taxable income) ) )
*DOCL = DOL * DOFL
 2027
$ 3,660,250.00
$ 2,196,150.00
$ 400,000.00
$ 1,064,100.00
$ 100,000.00
$ 964,100.00
$ 385,640.00
$ 578,460.00
$ 100,000.00
$ 478,460.00
$ 1,000,000.00
$ 0.48

10%
14%
20%

2027
1.38
1.10
1.52
Future Value Calculations
Present value $ 1,000.00
Years 1
Interest Rate 10.00%
Future Value $1,100.00
If u deposit $1k in the bank now, how much is its value in a year?
*deposit = u give money to bank = cash out for u -> pv = negative

Present Value of an Annuity

Payment $ 100.00
Interest Rate 8.00%
Number of Payments 5
Present Value ($399.27)
U need to pay ur staff retirement fund $100 annually for 5 years,
how much is the value of the whole 5 payments now?
*u will make payment = cash out

Annuity Payment
Present Value $ -
Future Value $ 10,000.00
Number of Payments 5
Interest Rate 4.00%
Annual Payment Amount ($1,846.27)
If u want ur staff to have $10k in the future for their retirement,
how much should u pay them if u plan to pay 5x?
*cash out = negative

Solving for i in an Annuity

Present Value $ -10,500.00
Future Value $ -
Annual Payment $ 1,500.00
Number of Years 10
Annual Rate 7.07%

Non-Annual Compounding Periods

Present Value $ 1,000.00
Annual Rate- 10.00%

Frequency Periods/Year FV
Annual 1 $ 1,100.00
Semiannual 2 $ 1,102.50
Quarterly 4 $ 1,103.81
Bi-monthly 6 $ 1,104.26
Monthly 12 $ 1,104.71
Bi-Weekly 26 $ 1,104.96
Weekly 52 $ 1,105.06
Daily 365 $ 1,105.16
Continuous

*divide the rate by period

*pv - negative so fv positive
Present Value Calculations
Future Value $ 1,100
Years 1
Interest Rate 10.00%
Present Value ($1,000.00)
If u want $1.1k in the future, how much should u deposit now?

Future Value of an Annuity

Payment $ 2,000.00
Interest Rate 7.50%
Number of Payments 30
Future Value $206,798.81
Staff is given retirement fund $2k annually for 30 years,
how much money will she have in 30 years?
*make paument = cash out -> payment = negative

Solving for N in an annuity

Present Value $ -
Future Value $ 10,000.00
Annual Payment ($1,846.27)
Annual Rate 4.00%
Number of Years 4.99999999999999
*nper

Deferred Annuities
Annual Retirement Income need $ 25,000.00
Years until Retirement 30
Years in Retirement 35
Rate of Return before Retirement 8.00%
Rate of Return during Retirement 6.00%
Savings Required at Retirement ($362,456.16)
How much should have by the first day in retirement?
*cash out = negative
Investment Required Today ($36,019.93)
*fv = make it positive first, cash out = negative
Annual Investment Required ($3,199.56)
*pv = make it postive first

Uneven Cash Flow Streams

Year Cash Flow PV
1 $ 1,000.00 $ 900.90
2 $ 2,000.00 $ 1,623.24
3 $ 3,000.00 $ 2,193.57
4 $ 4,000.00 $ 2,634.92
5 $ 5,000.00 $ 2,967.26
Interest Rate 11.00%
Present Value $10,319.90 $ 10,319.90
*use npv or normal, but that way ->
Future Value $ 17,389.63
*pv = make negative, so fv positive

Uneven Cash Flow Streams

Year Cash Flow
0 ($10,319.90) *pv before
1 $ 1,000.00
2 $ 2,000.00
3 $ 3,000.00
4 $ 4,000.00
5 $ 5,000.00
Yield 11.00% *irr
Amortizing a loan
Mortgage principal $100,000.00
"Points" 1.50%
Quoted interest 8.00%
Mortgage term (years) 10
Annual payment ($14,902.95)
IRR 8.34%

Mortgage principal at Payment at end of Interest part of

Year beginning of year year the payment
*interest = ipmt
1 $ 100,000.00 $ -14,902.95 $ -8,000.00
2 $ 93,097.05 $ -14,902.95 $ -7,447.76
3 $ 85,641.87 $ -14,902.95 $ -6,851.35
4 $ 77,590.27 $ -14,902.95 $ -6,207.22
5 $ 68,894.54 $ -14,902.95 $ -5,511.56
6 $ 59,503.15 $ -14,902.95 $ -4,760.25
7 $ 49,360.46 $ -14,902.95 $ -3,948.84
8 $ 38,406.34 $ -14,902.95 $ -3,072.51
9 $ 26,575.90 $ -14,902.95 $ -2,126.07
10 $ 13,799.03 $ -14,902.95 $ -1,103.92
11 $ - finished

One way sensitivity analysis Mortgage Payment

changing the term / year $ -14,902.95
5
10
15
20
25
*place annual pmt to start, block the whole thing, don’t include label, data -> what if analysis -> table, collum clik the term, just

Two way sensitivity analysis $ -14,902.95 $ 100,000.00 $ 80,000.00

changing the term and principal 5
10
15
20
25
30
*same, but now row click on the principal amount and collumn click the term
 Repayment of the Mortgage
principal Year cash flow
*repayment = ppmt 0 $ 98,500.00 *principal * (1 - point)
$ -6,902.95 1 $ -14,902.95
$ -7,455.18 2 $ -14,902.95
$ -8,051.60 3 $ -14,902.95
$ -8,695.73 4 $ -14,902.95
$ -9,391.39 5 $ -14,902.95
$ -10,142.70 6 $ -14,902.95
$ -10,954.11 7 $ -14,902.95
$ -11,830.44 8 $ -14,902.95
$ -12,776.88 9 $ -14,902.95
$ -13,799.03 10 $ -14,902.95

sis -> table, collum clik the term, just the number

$ 60,000.00 $ 40,000.00