Excel Advanced Excel For Finance EXERCISE

Download as xlsx, pdf, or txt
Download as xlsx, pdf, or txt
You are on page 1of 91

CREATING TEXT HISTOGRAMS

Month Units Sold Chart


January 834
February 1,132
March 1,243
April 1,094
May 902
June 1,543
July 1,654
August 2,123
September 1,566
October 1,434
November 1,321
December 1,654

Budget Actual Pct. Diff Under Budget


Jan 300 311
Feb 300 298
Mar 300 305
Apr 350 351
May 350 402
Jun 350 409
Jul 500 421
Aug 500 454
Sep 500 474
Oct 500 521
Nov 500 476
Dec 500 487
Exceeded Budget
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Timberland Industries December 31 Balance Sheets
(in thousands)

Assets
Cash and cash equivalents
Short-term investments
Accounts Receivable
Inventories
Total current assets
Fixed assets
Total assets

Liabilities and equity


Accounts payable
Accruals
Notes payable
Total current liabilities
Long-term debt
Total liabilities
Common stock
Retained Earnings
Total common equity
Total liabilities and equity

a. The company’s sales for 2011 were 455,150, and EBITDA was 15 percent
Further, depreciation amounted to 11% of net fixed assets, interest charges
corporate tax rate was 32%, and Timberland pays 40% of its net income
out in dividends. Given this information, construct Timberlandland's 20
All figures above are in thousands also.

The input information required for the problem is outlined in the "Key Input Dat
this data and the balance sheet above, we constructed the income statement show

Key Input Data for Cumberland Industries

Sales Revenue
EBITDA as a percent of sales
Depr. as a % of Fixed Assets
Tax rate
Interest Expense
Dividend Payout Ratio

Sales
Expenses excluding depreciation and amortization
EBITDA
Depreciation (no amortization charges)
EBIT
Interest Expense
EBT
Taxes (40%)
Net Income

Common dividends
Addition to retained earnings

b. Next, construct the firm’s statement of retained earnings for the year en
then its 2011 statement of cash flows.

Statement of Retained Earnings


(in thousands)
Retained Earnings, Jan 1, 2011
Add: Net Income
Total
Less: Common Dividends
Retained Earnings, Dec 31, 2011
Statement of Cash Flows
Cash Provided/Used by Operating Activities
Net Income after Tax
Add: Depreciation
Net Cash Flow
Increase in A/R
Increase in Inventories
Increase in A/P
Increase in Accruals

Cash Provided/Used by Investing Activities


Increase in Fixed Assets

Cash Provided/Used by Financing Activities


Decrease in Short Term Investments
Increase in Notes Payable
Increase in Common Stock
Increase in Long Term Debt
Payment of Dividend

Add: Cash Balance, Jan 1, 2011


Cash Balance, Dec 31, 2011
c. Calculate net operating working capital, total net operating capital, net o
cash flow, and free cash flow for 2011

Working Capital= CA - CL
NOWC = Operating CA - Operating CL
Cash+A/R+Invty A/P=Accrual
Net Operating Working Capital
NOWC11 =

Operating
current Operating current
= assets - liabilities
= 233,259 61,238
172,021
NOWC10 =

Operating
current Operating current
= assets - liabilities
= 195,134 45,765
149,369
Total Net Operating Capital
TOC11 =
= NOWC + Fixed assets
= 172,021 + 67,165
239,186
TOC10 =
= NOWC + Fixed assets
= 149,369 + 42,436
191,805
Net Operating Profit After Taxes (NO INTEREST)
NOPAT11 =
= EBIT x (1-T)
= 60,884 x 60%
36,531
Operating Cash Flow
OCF11 =
= NOPAT + Depreciation
= 36,531 + 7,388
43,919
Free Cash Flow - free to be distributed to investors after all investments ma
FCF11 =
= OCF - Gross investment in operating capita
= 43,919 - 54,769.15
(10,850)
or

FCF11 =
= NOPAT - Net investment in operating capital
= 36,531 - 47,381.00
(10,850)
d. Calculate the firm’s EVA and MVA for 2011. Assume that Laiho had 10
the year-end closing stock price was 17.25 per share, and its after-tax cos

Additional Input Data


Stock price 17.25
# of shares (in thousands) 10,000
A-T cost of capital 12%

Market Value Added


MVA =
= Stock price x # of shares
= 17.25 x 10,000.00
14,895
Economic Value Added
EVA =
= NOPAT - Operating Capital x
= 36,531 - 239,186
7,828
2011 2010 Operating
NIAT 31,386
91,450 74,625 16,825 Deprc 7,388
11,400 15,100 (3,700)
103,365 85,527 17,838 (17,838)
38,444 34,982 3,462 (3,462)
244,659 210,234 34,425
67,165 42,436 24,729
311,824 252,670 59,154
0
0
30,761 23,109 7,652 7,652
30,477 22,656 7,821 7,821
16,717 14,217 2,500
77,955 59,982 17,973
76,264 63,914 12,350
154,219 123,896 30,323
100,000 90,000 10,000
57,605 38,774 18,831
157,605 128,774 28,831
311,824 252,670 59,154 32,947

BITDA was 15 percent of sales. Furthermore,


assets, interest charges were 8,575, the
% of its net income
Timberlandland's 2011 income statement.

d in the "Key Input Data" section below. Using


income statement shown below.

455,150
15%
11%
40%
8,575
40%

2011 2010
455,150 364,120
386,878 321,109
68,273 43,011 $5,145
7,388 6,752
60,884 36,259 $3,430
8,575 7,829 $8,575
52,309 28,430
20,924 11,372
31,386 17,058

12,554 6,823
18,831 10,235

rnings for the year ending December 31, 2011, and

``

38,774
31,386
70,160
12,554
57,605

31,386
7,388
38,774
(17,838)
(3,462)
7,652
7,821 32,947

(32,117)

3,700
2,500
10,000
12,350
(12,554) 15,995
16,825
74,625
91,450
perating capital, net operating profit after taxes, operating

Net Investment in Operating Capital

47,381

Gross Investment in Operating Capital


54,769

NIAT
Net Cash Flow - NIAT+DEPRC

ter all investments made to Operations- via dividends, T/S, Interest, Principal, Inv. In Non

ment in operating capital

nt in operating capital

me that Laiho had 10 million shares outstanding, that


e, and its after-tax cost of capital was 12 percent.

- Total common equity


- 157,605
apital x After-tax cost of capital
x 12%
Investing Financing
-12,554

3,700

(32,117)

2,500

12,350

10,000

(32,117) 15,995
16,825
16,825
0
rest, Principal, Inv. In Non -oprating asset
Income Statement (Thousands)
2009 2010
Sales 400,000.00 420,000.00
Costs 344,000.00 361,994.20
Operating Profit 56,000.00 58,005.80
Interest Expense 11,678.70 12,262.80
Earnings Before Taxes 44,321.30 45,743.00
Taxes (see below for tax rate) 17,728.52 18,297.20
Net Income 26,592.78 27,445.80

Dividends 21,200.00 22,300.00


Addition to retained earnings 5,392.78 5,145.80

Balance Sheets (Thousands)


Assets 2009 2010
Operating current assets 162,000.00 168,000.00
Total current assets 162,000.00 168,000.00
Net PPE 199,000.00 210,042.00
Total assets 361,000.00 378,042.00

Liabilities and Shareholders' Equity


Operating current liabilities 57,911.50 62,999.70
Total current liabilities 57,911.50 62,999.70
Long-term debt 136,253.00 143,061.00
Total liabilities 194,164.50 206,060.70
Total common equity 166,835.50 171,981.30
Total liabilities and equity 361,000.00 378,042.00

Other Data
Tax rate 40% 40%
Expected growth rate
Weighted average cost of capital (WACC)
Number of shares of stock (000)

FCF Valuation 2009 2010


NOPAT 33,600.00 34,803.48
Operating CA 162,000.00 168,000.00
Operating CL 57,911.50 62,999.70
NOWC 104,088.50 105,000.30
Net PPE 199,000.00 210,042.00
Total net operating capital 303,088.50 315,042.30
Investment in capital 11,953.80
ROIC (beginning capital) 11.48%
FCF 22,849.68

FCF
Value of operations
Plus the value of non-operating assets
Total value of the corporation
Minus value of debt
Value of equity
Price per share

EVA
EVA based on ROIC
2011
441,000.00
374,881.60
66,118.40
12,875.50
53,242.90
21,297.16
31,945.74

23,400.00
8,545.74

2011
176,400.00
176,400.00
220,500.00
396,900.00

66,150.00
66,150.00
150,223.00
216,373.00
180,527.04
396,900.04

40%
5.00%
10.02%
10,000

2011
39,671.04
176,400.00
66,150.00
110,250.00
220,500.00
330,750.00
15,707.70 Net investment in operating capital
12.59% NOPAT/total net operating capital beginning
23,963.34 NOPAT -net investment in operating capital

2011
23,963.34
501,225.24 This is also the horizon value calculation
0 Value of operation= FCFt +1 gordon model
501,225.24 (return-growth rate)
216,373.00 = 23963.34(1+5%)
284,852.24 10.02%-5%
28.49 = 25161.507
5.02%
8,103.80 501225.24
8,103.80
gordon model
Strategic planning is one of the core functions of an organization, and it involves the coordination of
plans with financial plans. While operational plans outline how the firm intends to reach its corpora
financial plans outline the manner in which the firm will obtain the necessary productive assets to op
Financial planning generally begins with a sales forecast, and that forecast generally starts with a rev
firm's recent history. Here are XYZ Co sales over the past 5 years:

Annual Growth
Sales Rate
2007 2,058
2008 2,534 23.1%
2009 2,472 -2.4%
2010 2,850 15.3%
2011 3,000 5.3%
Average = 10.3%

THE SALES FORECAST

The first step in a sales forecast are several ways to estimate the historical growth rate, ranging from
The simplest are to estimate the average annual growth rate and the compound annual growth rate.

Average annual growth rate = 10.3%


future value = present value (1+cagr
Compound annual growth rate = 9.88% fv
pv

Using Regression Analysis via Chart Wizard


Regression or Line of least
squares or line of best fit
The chart shows the regression line. If you actually want the regression intercept and slope, the easi
Wizard to create the INTERCEPT and SLOPE functions, as shown below.

Intercept = -439,397 (Using the INTERCEPT function)

Slope = 220 (Using the SLOPE function)

You could always use the estimated interecept and slope to project the future sales, but an even easie
function. This allows you to specify the past years and sales, and then specify a projected year. It th
gives you the projected value. See below for details.

Projected sales for 2011 =

to regress the natural log (LN) of sales versus the years. The slope coefficient is the estimate of the h
chart below; we plotted the trendline and the regression equation. NaturalLog(LN)ofSales

Management started with the regression prediction, then modified it based on qualitative data to
3,300, the forecasted value given in the text. Management's sales forecast represents a growth rate o

We examine a forecasting method for a firm using the percentage of sales of method. This forecastin
items on the financial statements are proportional to sales. In particular, it assumes that the followin
(1) Costs; (2) Cash (i.e., the company needs a certain amount of cash on hand, since it does not know
or deposits will clear the bank); (3) Accounts receivable (the proportion will depend on the firm's cre
plant and equipment (this is reasonable for the long-term; in the short-term, firm's often have excess
in this model); (6) Accounts payable; and (7) Accruals. It also assumes that Depreciation is proporti
Other items on the financial statements are a direct result of the firm's financial policies (i.e., dividen
policy), which we discuss below.
items on the financial statements are proportional to sales. In particular, it assumes that the followin
(1) Costs; (2) Cash (i.e., the company needs a certain amount of cash on hand, since it does not know
or deposits will clear the bank); (3) Accounts receivable (the proportion will depend on the firm's cre
plant and equipment (this is reasonable for the long-term; in the short-term, firm's often have excess
in this model); (6) Accounts payable; and (7) Accruals. It also assumes that Depreciation is proporti
Other items on the financial statements are a direct result of the firm's financial policies (i.e., dividen
policy), which we discuss below.

The next step is to analyze the historical "Pro Forma" ratios. The actual historical statements are sh
the Pro Forma analysis are shown below the actual statements.

INCOME STATEMENT
(in thousands) 2010 2011

Sales 2,850.0 3,000.0


Costs except depreciation 2,497.0 2,616.2
Depreciation 90.0 100.0
Total operating costs 2,587.0 2,716.2
EBIT 263.0 283.8
Less Interest 60.0 88.0
Earnings before taxes (EBT) 203.0 195.8
Taxes (40%) 81.2 78.3
NI before preferred dividends 121.8 117.5
Preferred dividends 4.0 4.0
NI available to common 117.8 113.5

Dividends to common 53.0 57.5


Add. to retained earnings (DRE) 64.8 56.0

Shares of common equity 50 50


Dividends per share 1.06 1.15
Price per share 26.00 23.00

BALANCE SHEET
(in thousands)
2010 2011
Assets
Cash 15.0 10.0
ST Investments 65.0 0.0
Accounts receivable 315.0 375.0
Inventories 415.0 615.0
Total current assets 810.0 1,000.0
Net plant and equipment 870.0 1,000.0
Total assets 1,680.0 2,000.0

2010 2011
Liabilities and equity
Accounts payable 30.0 60.0
Accruals 130.0 140.0
Notes payable 60.0 110.0
Total current liabilities 220.0 310.0
Long-term bonds 580.0 754.0
Total liabilities 800.0 1,064.0
Preferred stock 40.0 40.0
Common stock 130.0 130.0
Retained earnings 710.0 766.0
Total common equity 840.0 896.0
Total liabilities and equity 1,680.0 2,000.0

Pro Forma Ratios Actual


2010 2011

Costs / Sales 87.6% 87.2%


Depreciation / Net plant & equip. 10.3% 10.0%
Cash / Sales 0.5% 0.3%
Accounts Rec. / Sales 11.1% 12.5%
Inventory / Sales 14.6% 20.5%
Net plant & equip. / sales 30.5% 33.3%
Accounts Pay. / Sales 1.1% 2.0%
Accruals / Sales 4.6% 4.7%
Long-term bonds/operating assets 35.9% 37.7%

Other Inputs (Assumptions)

Sales Growth Rate


Tax rate
Dividend growth rate
Interest rate on notes payable and short-term investments
Interest rate on long-term bonds
Coupon rate on preferred stock
Stock price

Table 1 XYZ, Inc.: Actual and Projected Income Statements (Thousands)


Actual Forecast
2011 2012
(1)
1 Sales 3,000.0 10%
2 Costs except depreciation 2,616.2 87.2%
3 Depreciation 100.0 10%
4 Total operating costs 2,716.2
5 EBIT 283.8
6 Less Interest 88.0 carry over from 2011
7 Earnings before taxes (EBT) 195.8
8 Taxes (40%) 78.3
9 NI before preferred dividends 117.5
10 Preferred dividends 4.0 carry over from 2011
11 NI available to common 113.5

12 Shares of common equity 50.0


13 Dividends per share 1.2 8%
14 Dividends to common 57.5
15 Add. to retained earnings 56.0

Table 2 XYZ, Inc.: Actual and Projected Balance Sheets (Thousands)


Actual
2011 Forecast
(1) 2012
Assets
1 Cash 10.0 0.33%
2 ST investments 0.0 carry over from 2011
3 Accounts receivable 375.0 12.50%
4 Inventories 615.0 20.50%
5 Total current assets 1,000.0
6 Net plant and equipment 1,000.0 33.33%
7 Total assets 2,000.0

Liabilities and equity


8 Accounts payable 60.0 2.00%
9 Accruals 140.0 4.67%
10 Notes payable 110.0 carry over from 2011
11 Total current liabilities 310.0
12 Long-term bonds 754.0 carry over from 2011
13 Total liabilities 1,064.0
14 Preferred stock 40.0 carry over from 2011
15 Common stock 130.0 carry over from 2011
16 Retained earnings 766.0 addition to RE
17 Total common equity 896.0
18 Total liabilities and equity 2,000.0
19 Required assetsa
20 Specified sources of financingb
21 Additional funds needed (AFN)

Amount of New Capital:


Percent Amount (000)
Notes Payable 25% 27.9
Long-term bonds 25% 27.9
Preferred Stock 0% 0.0
Common Stock 50% 55.7
100% 111.4

a
Required assets include all forecasted operating assets plus the short-term investments fro
b
Specified sources of financing include forecasted operating current liabilities, forecasted lo
forecasted preferred stock, forecasted common equity, and the amount of notes payable fr
t involves the coordination of operating
m intends to reach its corporate objectives,
cessary productive assets to operate. 3,500
cast generally starts with a review of the
3,000
f(x) = 219.999999999985 x − 439397.19999997
R² = 0.903786341921051
2,500

2058.00
2,000
23.1% 2261.33 203.33 Column
-2.4% 2484.75 223.42 Linear (
15.3% 2730.25 245.50 1,500 Linear (
5.3% 3000.00 269.75
10.3% 1,000

500

cal growth rate, ranging from the simple to the complicated.


0
ompound annual growth rate. 2006 2007 2008 2009 2010 2011 2012

value = present value (1+cagr) t (raise to time)


9.88% ^ -= raise
9.88% array formula
n intercept and slope, the easiest way is to use the function
low.

SALES
EPT function) EQUATION
SALES = 220 YEAR - 439397

SLOPE 220 INTERCE -439397

2012 3243 3243


2013 3463 3463
2014 3683 3683

future sales, but an even easier way is to use the TREND


specify a projected year. It then fits the regression line and

(Using the TREND function)

fficient is the estimate of the historical sales growth rate. See the
NaturalLog(LN)ofSales

ased on qualitative data to


ast represents a growth rate of 10%.

les of method. This forecasting method assumes that many


ar, it assumes that the following items are proportional to sales:
n hand, since it does not know exactly when the checks it writes
n will depend on the firm's credit policy; (4) Inventories; (5) Net
-term, firm's often have excess capacity, which we discuss later
s that Depreciation is proportional to Net plant and equipment.
financial policies (i.e., dividend policy and capital structure
ual historical statements are shown below. The ratios needed for
below the actual statements.
Percentage of Sales Method
Common Size statements
2010 2011

100.00% 100.00%
87.61% 87.21%
3.16% 3.33%
90.77% 90.54%
9.23% 9.46%
2.11% 2.93%
7.12% 6.53%
2.85% 2.61%
4.27% 3.92%
0.14% 0.13%
4.13% 3.78%

Common size statements

2010 2011

0.9% 0.5%
3.9% 0.0%
18.8% 18.8%
24.7% 30.8%
48.2% 50.0%
51.8% 50.0%
100.0% 100.0%

2010 2011
1.8% 3.0%
7.7% 7.0%
3.6% 5.5%
13.1% 15.5%
34.5% 37.7%
47.6% 53.2%
2.4% 2.0%
7.7% 6.5%
42.3% 38.3%
50.0% 44.8%
100.0% 100.0%

Naïve Forecast (based on latest data)


Preliminary
Historical Industry Forecast
Average Composite 2012

87.4% 87.1% 87.2%


10.2% 10.2% 10.0%
0.4% 1.0% 0.3%
11.8% 10.0% 12.5%
17.5% 11.1% 20.5%
31.9% 33.3% 33.3%
1.5% 1.0% 2.0%
4.6% 2.0% 4.7%
36.8% 30.9% 37.7%

10%
40%
8%
8%
10%
10%
23

Forecast Adjustments Final Forecast


2012

2011 sales 3,300 3,300.0


2012 sales 2,878 2,877.6
2012 net plan 110 110.0
2,988 2,987.6
312 312.4
rry over from 2011 88
224
90
135
rry over from 2011 4
131

50.0
2011 Dividen 1.2
62.1
68.54

Forecast Adjustments Final Forecast


2012

2012 sales 11.0 11.0


rry over from 2011 0.0 0.0
2012 sales 412.5 412.5
2012 sales 676.5 676.5
1,100.0 1100.0
2012 sales 1,100.0 1100.0
2,200.0 2200.0

2012 sales 66.0 66.0


2012 sales 154.0 154.0
rry over from 2011 110.0 27.9 137.9
330.0 357.9
rry over from 2011 754.0 27.9 781.9
1,084.0 1139.7
rry over from 2011 40.0 40.0
rry over from 2011 130.0 55.7 185.7
addition to RE 834.5 834.5
964.5 1020.3
2,088.5 2200.0
2,200.0
2,088.5
111.4

Interest rate
8%
10%

-
`

he short-term investments from the previous year.


urrent liabilities, forecasted long-term bonds,
he amount of notes payable from the previous year.
x − 439397.19999997

Column E
Linear (Column E)
Linear (Column E)

2011 2012
INCOME STATEMENT
(in thousands) 2010

Sales 2,850.00
Costs except depreciation 2,497.00
Depreciation 90.00
Total operating costs 2,587.00
EBIT 263.00
Less Interest 60.00
Earnings before taxes (EBT) 203.00
Taxes (40%) 81.20
NI before preferred dividends 121.80
Preferred dividends 4.00
NI available to common 117.80

Dividends to common 53.00


Add. to retained earnings (DRE) 64.80

Shares of common equity 50


Dividends per share 1.1
Price per share 26.0

BALANCE SHEET
(in thousands)
2010
Assets
Cash 15.0
ST Investments 65.0
Accounts receivable 315.0
Inventories 415.0
Total current assets 810.0
Net plant and equipment 870.0
Total assets 1,680.0

2010
Liabilities and equity
Accounts payable 30.0
Accruals 130.0
Notes payable 60.0
Total current liabilities 220.0
Long-term bonds 580.0
Total liabilities 800.0
Preferred stock 40.0
Common stock 130.0
Retained earnings 710.0
Total common equity 840.0
Total liabilities and equity 1,680.0

Pro Forma Ratios Actual


2010

Costs / Sales 87.6%


Depreciation / Net plant & equip. 10.3%
Cash / Sales 0.5%
Accounts Rec. / Sales 11.1%
Inventory / Sales 14.6%
Net plant & equip. / sales 30.5%
Accounts Pay. / Sales 1.1%
Accruals / Sales 4.6%
Long-term bonds/operating assets 35.9%

Other Inputs

Sales Growth Rate


Tax rate
Dividend growth rate
Interest rate on notes payable and short-term investments
Interest rate on long-term bonds
Coupon rate on preferred stock

Funds raised as notes payable


Funds raised as long-term debt
Funds raised as preferred stock
Funds raised as new common stock

MicroDrive, Inc.: Actual and Projected Income Statements (Millions)

Actual
2011
(1)
1 Sales 3,000.0
2 Costs except depreciation 2,616.2
3 Depreciation 100.0
4 Total operating costs 2,716.2
5 EBIT 283.8
6 Less Interest 88.0
7 Earnings before taxes (EBT) 195.8
8 Taxes (40%) 78.3
9 NI before preferred dividends 117.5
10 Preferred dividends 4.0
11 NI available to common 113.5

12 Shares of common equity 50.0


13 Dividends per share 1.2
14 Dividends to common 57.5
15 Add. to retained earnings 56.0

MicroDrive, Inc.: Actual and First Pass Projected Balance Sheets (Thousands)

Actual
2011
(1)
Assets
1 Cash 10.0
2 ST investments 0.0
3 Accounts receivable 375.0
4 Inventories 615.0
5 Total current assets 1,000.0
6 Net plant and equipment 1,000.0
7 Total assets 2,000.0

Liabilities and equity


8 Accounts payable 60.0
9 Accruals 140.0
10 Notes payable 110.0
11 Total current liabilities 310.0
12 Long-term bonds 754.0
13 Total liabilities 1,064.0
14 Preferred stock 40.0
15 Common stock 130.0
16 Retained earnings 766.0
17 Total common equity 896.0
18 Total liabilities and equity 2,000.0

19 Required operating assets


20 Specified sources of financing
21 Additional funds needed (AFN)

HOW THE AFN WILL BE RAISED:

Notes payable
Long-term debt
Preferred stock
Common stock
Total

Note: if the AFN is negative, then the firm has more than it needs to finance the assets. It could
financing by paying off debt, buying back stock, or paying a larger dividend. Instead, we assu
any extra funds to purchase additional short-term investments.
New short-term investments =
New shares of stock
New equity issued = 56.9
Stock price = $23.00
# new shares issued = 2.473
Percentage of Sales Method
Common Size statements
2011 2010 2011

3,000.00 100.00% 100.00%


2,616.20 87.61% 87.21%
100.00 3.16% 3.33%
2,716.20 90.77% 90.54%
283.80 9.23% 9.46%
88.00 2.11% 2.93%
195.80 7.12% 6.53%
78.32 2.85% 2.61%
117.48 4.27% 3.92%
4.00 0.14% 0.13%
113.48 4.13% 3.78%

57.50
55.98

50
1.2
23.0

Common size statements

2011 2010 2011

10.0 0.9% 0.5%


0.0 3.9% 0.0%
375.0 18.8% 18.8%
615.0 24.7% 30.8%
1,000.0 48.2% 50.0%
1,000.0 51.8% 50.0%
2,000.0 100.0% 100.0%

2011 2010 2011


60.0 1.8% 3.0%
140.0 7.7% 7.0%
110.0 3.6% 5.5%
310.0 13.1% 15.5%
754.0 34.5% 37.7%
1,064.0 47.6% 53.2%
40.0 2.4% 2.0%
130.0 7.7% 6.5%
766.0 42.3% 38.3%
896.0 50.0% 44.8%
2,000.0 100.0% 100.0%
Preliminary
Actual Historical Industry Forecast
2011 Average Composite 2012

87.2% 87.4% 87.1% 87.2%


10.0% 10.2% 10.2% 10.0%
0.3% 0.4% 1.0% 0.3%
12.5% 11.8% 10.0% 12.5%
20.5% 17.5% 11.1% 20.5%
33.3% 31.9% 33.3% 33.3%
2.0% 1.5% 1.0% 2.0%
4.7% 4.6% 2.0% 4.7%
37.7% 36.8% 30.9% 37.7%

10%
40%
8%
nvestments 8.0%
10.0%
10%

25%
25%
0%
50%

Forecast
Forecast Basis 2012
(2) (3)
10% 2011 Sales 3,300.00
87.2% 2012 sales 2,877.60
10% 2012 NPE 110.00
2,987.60
312.40
86.76
225.64
90.26
135.38
10% of average 4.00
131.38

52.47
8% 2011 DPS 1.24
65.17
66.21

ets (Thousands)

Forecast
Forecast Basis 2,012.00
(2) (3)

0.3% 2012 Sales 11.0


-
12.50% 2012 Sales 412.5
20.50% 2012 Sales 676.5
1,100.0
33.33% 2012 Sales 1,100.0
2,200.0

2.00% 2012 Sales 66.0


4.67% 2012 Sales 154.0
138.4
358.4
782.4
1,140.9
40.0
186.9
832.2
1,019.1
2,200.0

2,200.0
2,086.2
113.8

25% 28.4
25% 28.4
0%
50% 56.9

eds to finance the assets. It could reduce its


rger dividend. Instead, we assume the firm will use
.
ABC has projected the following sales for the first eight months of 2012 as follows:

Jan 100,000 May 275,000


Feb 120,000 Jun 200,000
Mar 150,000 Jul 200,000
Apr 300,000 Aug 180,000

ABC collects 20% of sales in the month of the sale, 50% in the month following, and the remaining 30%,
two months following the sale. During November and December 2011, sales were 220,000 and 175,000 respectiv

ABC purchases raw materials two months in advance of its sales equal to 65% of its final sales. The supplier is pai
one month after delivery. Thus purchases for April sales are made in February and payment made in March.

In addition, ABC pays 10,000 per month for rent and 20,000 each month for other expenditures. Tax prepayment
22,500 are made each quarter beginning in March. The company's cash balance as of Dec 31, 2011 was 22,000.
A minimum balance of 20,000 must be maintained at all times to satisfy the bank's line of credit agreement.

ABC has arranged for a short term credit with its bank at an interest rate of 12% p.a. (1% per month) to be paid m
Borrowing to meet estimated monthly cash needs takes place at the end of the month, and interest is not paid un
end of the following month. Consequently, if the firm were to borrow 50,000 during the month of April, then it w
500 in interest during May. Finally, ABC follows a policy of repaying its outstanding short-term debt in any month
its cash balance exceeds the minimum cash balance of 20,000.

a) What will be the cash requirement for the next 6 months so that it can renegotiate the terms of a short-term c
arrangement with its bank, if necessary. To evaluate the problem, ABC plans to evaluate the impact of a +/- 20%
in its monthly sales efforts. Prepare a 6-month cash budget and use it to evaluate the firm's cash requirements.

b) ABC has a note due in June. Will the firm have sufficient cash to repay the loan?

ABC Company Cash Budget


Minimum Cash Balance
Beginning Cash Balance

Jan May
Feb Jun
Mar Jul
Apr Aug

Collection
1st Month Purchases disb
2nd Month % of Sales
3rd Month Interest rate
Cash Budget for January to June, 2012
Nov Dec Jan Feb Mar
Sales
Collections:
1st month
2nd month
3rd month
Total Collections

Purchases
Payments

Receipts

Disbursements
Payment for purchases
Rent
Other expenditures
Tax deposits
Interest on S-T
Total Disbursements

Net Monthly Change

Analysis of Borrowing Needs


Beginning Cash Balance
Ending Cash (Unadjusted)
Borrowing
Loan Repayment
Ending Cash (Adjusted)
Cumulative Borrowing
maining 30%,
and 175,000 respectively.

ales. The supplier is paid


nt made in March.

tures. Tax prepayments of


31, 2011 was 22,000.
credit agreement.

per month) to be paid monthly.


d interest is not paid until the
month of April, then it would pay
erm debt in any month in which

terms of a short-term credit


he impact of a +/- 20% variation
's cash requirements.
Apr May Jun Jul Aug

We fill this up last


TIME VALUE OF MONEY PROBLEMS USING SPECIAL FUNCTIONS IN EXCEL:
1) Calculate the Future Value given the following:

Present Value 15,000.00


Years 2
Rate 12%
Future Value (Formula) 18,816.00 fv=pv(1+r)t
Future Value (Excel Ftn) (18,816.00)

2) Calculate the Present Value given the following:


Future Value 500,000.00
Years 5
Rate 10%
Present Value (Formula)
Present Value (Excel Ftn) (310,460.66)

3) How much is the annuity payment given the following:


Present Value 0
Future Value 10,000.00
Number of Payments 5
Interest Rate 4%
Annual Payment -$1,846.27

4) Determine the number of periods given the following:


Present Value 0
Future Value 10,000.00
Annual Payment 1,846.27
Annual Rate 4.00%
Number of Years 5.00

5) Determine the interest rate given the following:


Present Value (10,500.00)
Future Value 0.00
Annual Payment 1,500.00
Number of Years 10
Annual Rate 7.07%
6) Present Value and Future Value of an uneven stream of cash flows

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)
Future Value (17,389.63)

Present value of cash inflows - present value of cash outflows

Non-Annual Compounding Worksheet


Investment 1,000,000.00
Simple Rate 10.00%
Periods per Year 1
Term (Years) 1
Future Value (1,100,000.00)

Investment 1,000,000.00
Simple Rate 10.00%
Periods per Year 2
Term (Years) 1
Future Value ($1,102,500.00)

Investment 1,000,000.00
Simple Rate 10.00%
Periods per Year 12
Term (Years) 1
Future Value

Non-Annual Compounding Periods


Present Value 1,000,000.00
Annual Rate 10.00%
Frequency Periods/Year FV
Annual 1 1,100,000.00
Semiannual 2 1,102,500.00
Quarterly 4 1,103,812.89
Bi-monthly 6 1,104,260.42
Monthly 12 1,104,713.07
Bi-weekly 26 1,104,958.95
Weekly 52 1,105,064.79
Daily 365 1,105,155.78
Continuous Infinite 1,105,170.92
N EXCEL:
AMORTIZATION SCHEDULE

Prepare a Monthly amortization schedule for a house loan from pag-ibig given the following data

LOAN AMORTIZATION SCHEDULE


Loan Principal 691,170.65
Annual rate of interest 10.0000%
Periods/year 12
Number of years 10
Monthly payment 9,133.87

Method 1 Year-end
Month Interest Principal Principal
0 691,170.65
1 5,759.76 3,374.12 687,796.53
2 5,731.64 3,402.23 684,394.30
3 5,703.29 3,430.59 680,963.72
4 5,674.70 3,459.17 677,504.54
5 5,645.87 3,488.00 674,016.54
6 5,616.80 3,517.07 670,499.48
7 5,587.50 3,546.38 666,953.10
8 5,557.94 3,575.93 663,377.17
9 5,528.14 3,605.73 659,771.44
10 5,498.10 3,635.78 656,135.67
11 5,467.80 3,666.07 652,469.59
12 5,437.25 3,696.62 648,772.97
13 5,406.44 3,727.43 645,045.54
14 5,375.38 3,758.49 641,287.05
15 5,344.06 3,789.81 637,497.24
16 5,312.48 3,821.39 633,675.84
17 5,280.63 3,853.24 629,822.60
18 5,248.52 3,885.35 625,937.25
19 5,216.14 3,917.73 622,019.53
20 5,183.50 3,950.38 618,069.15
21 5,150.58 3,983.29 614,085.86
22 5,117.38 4,016.49 610,069.37
23 5,083.91 4,049.96 606,019.41
24 5,050.16 4,083.71 601,935.70
25 5,016.13 4,117.74 597,817.96
26 4,981.82 4,152.05 593,665.90
27 4,947.22 4,186.66 589,479.25
28 4,912.33 4,221.54 585,257.70
29 4,877.15 4,256.72 581,000.98
30 4,841.67 4,292.20 576,708.78
31 4,805.91 4,327.96 572,380.82
32 4,769.84 4,364.03 568,016.79
33 4,733.47 4,400.40 563,616.39
34 4,696.80 4,437.07 559,179.32
35 4,659.83 4,474.04 554,705.28
36 4,622.54 4,511.33 550,193.95
37 4,584.95 4,548.92 545,645.03
38 4,547.04 4,586.83 541,058.20
39 4,508.82 4,625.05 536,433.15
40 4,470.28 4,663.59 531,769.56
41 4,431.41 4,702.46 527,067.10
42 4,392.23 4,741.65 522,325.45
43 4,352.71 4,781.16 517,544.29
44 4,312.87 4,821.00 512,723.29
45 4,272.69 4,861.18 507,862.11
46 4,232.18 4,901.69 502,960.43
47 4,191.34 4,942.53 498,017.89
48 4,150.15 4,983.72 493,034.17
49 4,108.62 5,025.25 488,008.92
50 4,066.74 5,067.13 482,941.79
51 4,024.51 5,109.36 477,832.43
52 3,981.94 5,151.93 472,680.50
53 3,939.00 5,194.87 467,485.63
54 3,895.71 5,238.16 462,247.47
55 3,852.06 5,281.81 456,965.66
56 3,808.05 5,325.82 451,639.84
57 3,763.67 5,370.21 446,269.63
58 3,718.91 5,414.96 440,854.68
59 3,673.79 5,460.08 435,394.60
60 3,628.29 5,505.58 429,889.01
61 3,582.41 5,551.46 424,337.55
62 3,536.15 5,597.72 418,739.83
63 3,489.50 5,644.37 413,095.45
64 3,442.46 5,691.41 407,404.04
65 3,395.03 5,738.84 401,665.21
66 3,347.21 5,786.66 395,878.55
67 3,298.99 5,834.88 390,043.66
68 3,250.36 5,883.51 384,160.15
69 3,201.33 5,932.54 378,227.62
70 3,151.90 5,981.97 372,245.64
71 3,102.05 6,031.82 366,213.82
72 3,051.78 6,082.09 360,131.73
73 3,001.10 6,132.77 353,998.96
74 2,949.99 6,183.88 347,815.08
75 2,898.46 6,235.41 341,579.67
76 2,846.50 6,287.37 335,292.29
77 2,794.10 6,339.77 328,952.52
78 2,741.27 6,392.60 322,559.92
79 2,688.00 6,445.87 316,114.05
80 2,634.28 6,499.59 309,614.46
81 2,580.12 6,553.75 303,060.71
82 2,525.51 6,608.37 296,452.35
83 2,470.44 6,663.43 289,788.91
84 2,414.91 6,718.96 283,069.95
85 2,358.92 6,774.95 276,295.00
86 2,302.46 6,831.41 269,463.58
87 2,245.53 6,888.34 262,575.24
88 2,188.13 6,945.74 255,629.50
89 2,130.25 7,003.63 248,625.87
90 2,071.88 7,061.99 241,563.88
91 2,013.03 7,120.84 234,443.04
92 1,953.69 7,180.18 227,262.87
93 1,893.86 7,240.01 220,022.85
94 1,833.52 7,300.35 212,722.50
95 1,772.69 7,361.18 205,361.32
96 1,711.34 7,422.53 197,938.79
97 1,649.49 7,484.38 190,454.41
98 1,587.12 7,546.75 182,907.66
99 1,524.23 7,609.64 175,298.02
100 1,460.82 7,673.05 167,624.97
101 1,396.87 7,737.00 159,887.97
102 1,332.40 7,801.47 152,086.50
103 1,267.39 7,866.48 144,220.02
104 1,201.83 7,932.04 136,287.98
105 1,135.73 7,998.14 128,289.84
106 1,069.08 8,064.79 120,225.05
107 1,001.88 8,132.00 112,093.06
108 934.11 8,199.76 103,893.29
109 865.78 8,268.09 95,625.20
110 796.88 8,336.99 87,288.21
111 727.40 8,406.47 78,881.74
112 657.35 8,476.52 70,405.21
113 586.71 8,547.16 61,858.05
114 515.48 8,618.39 53,239.66
115 443.66 8,690.21 44,549.46
116 371.25 8,762.63 35,786.83
117 298.22 8,835.65 26,951.18
118 224.59 8,909.28 18,041.91
119 150.35 8,983.52 9,058.38
120 75.49 9,058.38 0.00
286,750.63 261,281.64

1) How much is the monthly amortization payment


2) How much interest is paid on the 2nd month
3) How much is the principal payment on the 18th month
4) How much is the cumulative interest payment for
the whole of 2nd year
5) How much is the cumulative principal payment for
the whole of the 4th year
6) What is the total interest payment
7) What is the total principal payment
the following data
Excel functions

-5,731.64
-3,885.35
-62,769.18
CAPITAL BUDGETING

A company must decide whether to introduce a new product line. The new product w
have startup costs, operational costs, and incoming cash flows over six years. This
project will have an immediate (t=0) cash outflow of 1,000,000 (which include
machinery, and employee training costs). Other cash outflows for years 1–6 are
expected to be 20,000 for the first year, increasing by 2,000 for the next five years .
Cash inflows are expected to be 350,000 for Year 1, followed by 320,000, 350,000,
200,000, 210,000 and 100,000 respectively for the next five years. All cash flows are
after-tax, and there are no cash flows expected after year 6. The required rate of retu
is 10%. Determine the Net Present Value and the Internal rate of return of the projec

Required Return 10%


Period Ouflow Inflow Net Cash Flow
0 (1,000,000.00) (1,000,000.00)
1 (20,000.00) 350,000.00 330,000.00
2 (22,000.00) 320,000.00 298,000.00
3 (24,000.00) 350,000.00 326,000.00
4 (26,000.00) 200,000.00 174,000.00
5 (28,000.00) 210,000.00 182,000.00
6 (30,000.00) 100,000.00 70,000.00

NPV 62,574.81
IRR 12.58%

2) NPV vs IRR

Required Return 12%


PERIOD PROJECT A PROJECT B
0 (1,000,000.00) (1,000,000.00)
1 0.00 400,000.00
2 200,000.00 400,000.00
3 300,000.00 300,000.00
4 500,000.00 300,000.00
5 900,000.00 200,000.00

NPV 201,416.06 193,695.28


IRR 17% 20%
16.19% 16.04%

b) MIRR

PERIOD
0 (6,260.00)
1 24,248.00
2 24,248.00
3 24,248.00
4 24,248.00
5 42,248.00

IRR 388%
CAGR

MIRR

3) Capital Rationing

Project Cost NPV Include


A 237,005 84,334 1
B 766,496 26,881 0
C 304,049 23,162 0
D 565,178 82,598 1
E 108,990 20,590 1
F 89,135 90,404 1
G 795,664 18,163 0
H 814,493 97,682 1
I 480,321 52,063 1
J 826,610 53,911 0
K 734,830 56,323 1
L 910,598 88,349 1
M 978,621 69,352 1
4,919,171
5,000,000.00 80,829
TOTAL NPV 641,695
4) PROJECTS WITH UNEQUAL LIVES
Rank the following projects according to the most to the least preferred:

Required return 12%


A B C
Time Cash Flow Cash Flow Cash Flow
0 (9,200) (6,500) (10,050)
1 17,000 20,000 30,000
2 17,000 30,000 30,000
3 17,000 40,000 30,000
4 17,000 50,000 30,000
5 17,000 30,000
6 17,000
7
8

NPV 60,693.92 95,520.07 98,093.29


PVIFA 4.11 3.04 3.60
ANPV 14,762.32 31,448.50 27,212.03

5) Investment Opportunity Schedule

Cost IRR
A 74,950 13.00%
B 138,298 11.48%
C 146,661 12.19%
D 189,921 13.82%
E 201,843 11.69%
F 271,477 15.38%
G 396,209 16.16%
H 407,769 16.51%
I 439,207 15.87%
J 445,529 15.02%
t line. The new product will
ws over six years. This
000 (which include
ws for years 1–6 are
for the next five years .
d by 320,000, 350,000,
years. All cash flows are
The required rate of return
te of return of the project.

if positive acceptable
higher than required return-acceptable
preferred:

D
Cash Flow
(12,500)
24,000
25,000
26,000
28,000
30,000
31,000
32,000
34,000

126,094.79
4.97
25,383.24
VERTICAL LOOKUP, HORIZONTAL LOOKUP, INDEX and MATCH
1) Using Vertical Lookup to look for data in a given array

Last Name First Name Department ID Date Hired


Enter a name --> Baslig Nancy Operations 3432 4/16/2003

Last Name First Name Department ID Date Hired


Abad Yolanda Sales 4466 3/5/1998
Baslig Nancy Operations 3432 4/16/2003
Bolante Ken Marketing 4422 12/1/2004
Candido Larry Administration 2822 9/16/1999
Collado Moe Administration 1231 3/12/2001
Dionisio Rita Administration 2604 4/15/2005
Donato James Operations 3983 2/9/2000
Escalon Pamela Data Processing 2144 3/24/2004
Edralin Paul Data Processing 1102 11/12/2003

Income is But Less Than


Greater Than or Rate
or Equal To…
Equal To…
Enter Income: 45,500 0 2,650 15.00%
The Rate is: 31.00% (Vlookup) 2,651 27,300 28.00%
31.00% (Lookup) 27,301 58,500 31.00%
58,501 131,800 36.00%
131,801 284,700 39.60%
284,701 45.25%

2) Using Horizontal Lookup

Income is
Greater Than or 0 2,651
Equal To…

But Less Than…


21,566 2,650 27,300
Enter Income:
Rate
28.00% 15.00% 28.00%
The Tax Rate is:

3) Using INDEX and MATCH


Date: 1/12/2007 Date Weekday Amount
Amount: 189 1/1/2007 Monday 23
1/2/2007 Tuesday 179
1/3/2007 Wednesday 149
189 1/4/2007 Thursday 196
1/5/2007 Friday 131
1/6/2007 Saturday 179
1/7/2007 Sunday 134
1/8/2007 Monday 179
1/9/2007 Tuesday 193
1/10/2007 Wednesday 191
1/11/2007 Thursday 176
1/12/2007 Friday 189
1/13/2007 Saturday 163
1/14/2007 Sunday 121
1/15/2007 Monday 100
1/16/2007 Tuesday 109
1/17/2007 Wednesday 151
1/18/2007 Thursday 138
1/19/2007 Friday 114
1/20/2007 Saturday 156

4) Comparison of the 3

Value: James Name Amount


Bob 50
LOOKUP: 300 Ellen 25
VLOOKUP: 300 Froilan 200
MATCH & INDEX 300 James 300
Jessica 400
John 100
Teddy 150
Jun 240
Eric 245
Jazz 346

5) TWO-WAY Lookup

Month: April Product 1 Product 2


Product: Product 2 January 2,892 1,771
February 3,380 4,711
Month Offset (Row #): 5 March 3,744 3,223
Product Offset (Col #): 3 April 3,221 2,438
Sales: 2,438 May 4,839 1,999
June 3,767 5,140
July 5,467 3,337
Single-formula --> 2,438 August 3,154 4,895
September 1,718 2,040
October 1,548 1,061
November 5,083 3,558
December 5,753 2,839
Total 44,566 37,012
27,301 58,501 131,801 284,701

58,500 131,800 284,700

31.00% 36.00% 39.60% 45.25%


Product 3 Combined
4,718 9,381
2,615 10,706
5,312 12,279
1,108 6,767
1,994 8,832
3,830 12,737
3,232 12,036
1,607 9,656
1,563 5,321
2,590 5,199
3,960 12,601
3,013 11,605
35,542 117,120
WORKING WITH ARRAY FORMULAS 1

1) Using an array formula to eliminate intermediate formulas

Product Units Sold Unit Price Normal Calcs


Widgets 3 50 150
Ridgets 10 100 1,000
Lidgets 5 20 100
Kidgets 9 10 90
Fidgets 3 60 180
Zidgets 1 200 200

1,720 (SUM formula)


1,720 (SUMPRODUCT Formula)
1,720 (Single array formula)

2) Conditional Sum Example with an Array


Find the total of sales made by salesperson Sanchez

Name Sale
Sanchez 880 Excel built-in function: The SumIF method
Jones 350 1,896
Santos 441
Reyes 280
Aguila 385 The array formula method
Fortes 281 1,896
Jordan 300
Milanes 250
Sanchez 201 Name Sum - Sale
Wong 398 Sanchez 1,896
Evangelista 440 Total Result 1,896
Sanchez 595
Fortes 560
Sanchez 220

3) An array formula: Calculate a single result


Use array formulas to find the average revenue for all divisions in both sales areas.

2010
Sales
Product 1
NCR 161,000
Calabarzon 198,200

Product X Product X
NCR 35,000 NCR 35,000
Calabarzon 60,000 Calabarzon 60,000
Add this new data into the mix.
Product 2 The array formula handles it.
NCR 160,700 The average function doesn't.
Calabarzon 190,100

Product 3
NCR 153,900
Calabarzon 190,700

AVE Function ARRAY


Average NCR 158,533 127,650
Average Calabarzon 193,000 159,750
WORKING WITH ARRAY FORMULAS 2

Example: SUM and Nested Ifs in an Array Formula


Find the sum of sales for a particular state and a particular beer type.

Determine the following:


a) Total sales from Oregon of Amber Ale beer
b) Total sales from California Pale Ale
c) Total 2008 sales of Ted of Pilsner from Wahington
d) Average sales of Stout from Wahington in 2008
e) Average sales of Deb in Winter for the past three years

Sample:
Washington, Amber Ale: 6,674,005 6,674,005

Season YearSales Type State Sales_Beer Salesman


Fall 2008 Amber Ale California 554,536 Ted
Fall 2008 Hefeweizen California 540,643 Deb
Fall 2008 Pale Ale California 577,548 Ted
Fall 2008 Pilsner California 455,905 Jun
Fall 2008 Porter California 490,871 Jun
Fall 2008 Stout California 446,383 Deb
Fall 2008 Amber Ale Oregon 457,726 Ted
Fall 2008 Hefeweizen Oregon 347,696 Jun
Fall 2008 Pale Ale Oregon 384,541 Kate
Fall 2008 Pilsner Oregon 386,420 Ted
Fall 2008 Porter Oregon 370,970 Kyle
Fall 2008 Stout Oregon 430,754 Deb
Fall 2008 Amber Ale Washington 500,847 Jun
Fall 2008 Hefeweizen Washington 507,070 Jun
Fall 2008 Pale Ale Washington 482,346 Ted
Fall 2008 Pilsner Washington 608,713 Kate
Fall 2008 Porter Washington 150,000 Kate
Fall 2008 Stout Washington 500,649 Ted
Spring 2008 Amber Ale California 545,780 Kate
Spring 2008 Hefeweizen California 440,644 Deb
Spring 2008 Pale Ale California 580,359 Kate
Spring 2008 Pilsner California 536,225 Kyle
Spring 2008 Porter California 414,908 Ted
Spring 2008 Stout California 377,997 Jun
Spring 2008 Amber Ale Oregon 331,289 Kate
Spring 2008 Hefeweizen Oregon 384,572 Kate
Spring 2008 Pale Ale Oregon 365,813 Deb
Spring 2008 Pilsner Oregon 396,338 Jun
Spring 2008 Porter Oregon 453,761 Kate
Spring 2008 Stout Oregon 356,538 Ted
Spring 2008 Amber Ale Washington 606,332 Deb
Spring 2008 Hefeweizen Washington 535,218 Jun
Spring 2008 Pale Ale Washington 493,364 Kate
Spring 2008 Pilsner Washington 559,100 Kate
Spring 2008 Porter Washington 220,350 Ted
Spring 2008 Stout Washington 476,975 Ted
Summer 2008 Amber Ale California 545,621 Kate
Summer 2008 Hefeweizen California 489,255 Jun
Summer 2008 Pale Ale California 523,124 Ted
Summer 2008 Pilsner California 612,216 Jun
Summer 2008 Porter California 425,562 Jun
Summer 2008 Stout California 485,285 Jun
Summer 2008 Amber Ale Oregon 467,173 Kate
Summer 2008 Hefeweizen Oregon 447,637 Ted
Summer 2008 Pale Ale Oregon 407,542 Jun
Summer 2008 Pilsner Oregon 449,575 Kate
Summer 2008 Porter Oregon 403,248 Deb
Summer 2008 Stout Oregon 449,293 Jun
Summer 2008 Amber Ale Washington 493,845 Jun
Summer 2008 Hefeweizen Washington 523,464 Jun
Summer 2008 Pale Ale Washington 575,692 Deb
Summer 2008 Pilsner Washington 568,633 Kate
Summer 2008 Porter Washington 100,250 Jun
Summer 2008 Stout Washington 487,012 Kate
Winter 2008 Amber Ale California 519,177 Ted
Winter 2008 Hefeweizen California 488,597 Ted
Winter 2008 Pale Ale California 456,653 Ted
Winter 2008 Pilsner California 528,843 Ted
Winter 2008 Porter California 420,782 Kate
Winter 2008 Stout California 439,751 Ted
Winter 2008 Amber Ale Oregon 348,503 Kate
Winter 2008 Hefeweizen Oregon 352,086 Jun
Winter 2008 Pale Ale Oregon 336,824 Deb
Winter 2008 Pilsner Oregon 350,924 Kate
Winter 2008 Porter Oregon 338,334 Kate
Winter 2008 Stout Oregon 383,738 Ted
Winter 2008 Amber Ale Washington 508,939 Ted
Winter 2008 Hefeweizen Washington 393,294 Ted
Winter 2008 Pale Ale Washington 430,380 Kate
Winter 2008 Pilsner Washington 390,741 Ted
Winter 2008 Porter Washington 118,030 Jun
Winter 2008 Stout Washington 522,282 Deb
Fall 2009 Amber Ale California 514,649 Ted
Fall 2009 Hefeweizen California 498,673 Kate
Fall 2009 Pale Ale California 541,930 Kate
Fall 2009 Pilsner California 541,022 Jun
Fall 2009 Porter California 487,516 Kate
Fall 2009 Stout California 558,787 Kate
Fall 2009 Amber Ale Oregon 393,690 Deb
Fall 2009 Hefeweizen Oregon 427,784 Kate
Fall 2009 Pale Ale Oregon 386,772 Ted
Fall 2009 Pilsner Oregon 430,461 Jun
Fall 2009 Porter Oregon 481,311 Kyle
Fall 2009 Stout Oregon 529,637 Jun
Fall 2009 Amber Ale Washington 596,707 Jun
Fall 2009 Hefeweizen Washington 541,275 Jun
Fall 2009 Pale Ale Washington 574,091 Ted
Fall 2009 Pilsner Washington 567,246 Kate
Fall 2009 Porter Washington 530,193 Kate
Fall 2009 Stout Washington 475,884 Kate
Spring 2009 Amber Ale California 533,691 Ted
Spring 2009 Hefeweizen California 534,352 Deb
Spring 2009 Pale Ale California 588,845 Ted
Spring 2009 Pilsner California 513,750 Kate
Spring 2009 Porter California 516,692 Jun
Spring 2009 Stout California 539,883 Ted
Spring 2009 Amber Ale Oregon 418,483 Kate
Spring 2009 Hefeweizen Oregon 452,955 Jun
Spring 2009 Pale Ale Oregon 432,909 Jun
Spring 2009 Pilsner Oregon 493,853 Ted
Spring 2009 Porter Oregon 393,368 Kate
Spring 2009 Stout Oregon 405,946 Ted
Spring 2009 Amber Ale Washington 561,874 Kate
Spring 2009 Hefeweizen Washington 544,747 Deb
Spring 2009 Pale Ale Washington 470,339 Deb
Spring 2009 Pilsner Washington 530,410 Jun
Spring 2009 Porter Washington 455,378 Deb
Spring 2009 Stout Washington 668,180 Jun
Summer 2009 Amber Ale California 597,626 Kate
Summer 2009 Hefeweizen California 612,909 Ted
Summer 2009 Pale Ale California 585,669 Deb
Summer 2009 Pilsner California 641,282 Kate
Summer 2009 Porter California 447,013 Ted
Summer 2009 Stout California 476,238 Deb
Summer 2009 Amber Ale Oregon 421,466 Ted
Summer 2009 Hefeweizen Oregon 427,983 Jun
Summer 2009 Pale Ale Oregon 429,498 Ted
Summer 2009 Pilsner Oregon 544,597 Kyle
Summer 2009 Porter Oregon 446,014 Ted
Summer 2009 Stout Oregon 487,611 Ted
Summer 2009 Amber Ale Washington 565,106 Ted
Summer 2009 Hefeweizen Washington 567,487 Kate
Summer 2009 Pale Ale Washington 538,648 Ted
Summer 2009 Pilsner Washington 708,608 Ted
Summer 2009 Porter Washington 634,104 Ted
Summer 2009 Stout Washington 522,179 Jun
Winter 2009 Amber Ale California 511,406 Jun
Winter 2009 Hefeweizen California 487,020 Jun
Winter 2009 Pale Ale California 563,504 Kate
Winter 2009 Pilsner California 565,428 Kate
Winter 2009 Porter California 380,743 Ted
Winter 2009 Stout California 351,971 Kate
Winter 2009 Amber Ale Oregon 388,646 Ted
Winter 2009 Hefeweizen Oregon 337,401 Ted
Winter 2009 Pale Ale Oregon 441,713 Jun
Winter 2009 Pilsner Oregon 438,764 Ted
Winter 2009 Porter Oregon 378,201 Jun
Winter 2009 Stout Oregon 413,519 Deb
Winter 2009 Amber Ale Washington 516,512 Kate
Winter 2009 Hefeweizen Washington 494,282 Kate
Winter 2009 Pale Ale Washington 538,958 Jun
Winter 2009 Pilsner Washington 502,214 Jun
Winter 2009 Porter Washington 539,525 Ted
Winter 2009 Stout Washington 517,806 Ted
Fall 2010 Amber Ale California 625,097 Kate
Fall 2010 Hefeweizen California 632,542 Jun
Fall 2010 Pale Ale California 565,957 Kate
Fall 2010 Pilsner California 609,354 Jun
Fall 2010 Porter California 501,393 Jun
Fall 2010 Stout California 461,281 Ted
Fall 2010 Amber Ale Oregon 476,654 Jun
Fall 2010 Hefeweizen Oregon 405,717 Kate
Fall 2010 Pale Ale Oregon 407,780 Jun
Fall 2010 Pilsner Oregon 462,903 Ted
Fall 2010 Porter Oregon 460,030 Kate
Fall 2010 Stout Oregon 463,982 Kate
Fall 2010 Amber Ale Washington 622,573 Ted
Fall 2010 Hefeweizen Washington 578,387 Ted
Fall 2010 Pale Ale Washington 579,998 Jun
Fall 2010 Pilsner Washington 594,253 Jun
Fall 2010 Porter Washington 473,198 Kate
Fall 2010 Stout Washington 601,406 Ted
Spring 2010 Amber Ale California 616,561 Deb
Spring 2010 Hefeweizen California 559,403 Ted
Spring 2010 Pale Ale California 597,369 Deb
Spring 2010 Pilsner California 709,122 Ted
Spring 2010 Porter California 462,316 Deb
Spring 2010 Stout California 466,554 Jun
Spring 2010 Amber Ale Oregon 380,338 Ted
Spring 2010 Hefeweizen Oregon 406,420 Ted
Spring 2010 Pale Ale Oregon 422,373 Ted
Spring 2010 Pilsner Oregon 385,923 Deb
Spring 2010 Porter Oregon 474,148 Deb
Spring 2010 Stout Oregon 438,409 Kate
Spring 2010 Amber Ale Washington 554,317 Kate
Spring 2010 Hefeweizen Washington 609,069 Deb
Spring 2010 Pale Ale Washington 563,406 Ted
Spring 2010 Pilsner Washington 606,490 Kate
Spring 2010 Porter Washington 564,560 Jun
Spring 2010 Stout Washington 600,194 Jun
Summer 2010 Amber Ale California 549,802 Kate
Summer 2010 Hefeweizen California 493,119 Kate
Summer 2010 Pale Ale California 576,355 Jun
Summer 2010 Pilsner California 670,233 Jun
Summer 2010 Porter California 524,001 Kate
Summer 2010 Stout California 527,703 Jun
Summer 2010 Amber Ale Oregon 355,197 Ted
Summer 2010 Hefeweizen Oregon 420,947 Jun
Summer 2010 Pale Ale Oregon 423,393 Kate
Summer 2010 Pilsner Oregon 547,726 Ted
Summer 2010 Porter Oregon 478,507 Kate
Summer 2010 Stout Oregon 425,549 Jun
Summer 2010 Amber Ale Washington 618,631 Kate
Summer 2010 Hefeweizen Washington 593,074 Kate
Summer 2010 Pale Ale Washington 708,115 Ted
Summer 2010 Pilsner Washington 657,230 Kate
Summer 2010 Porter Washington 636,020 Kate
Summer 2010 Stout Washington 648,918 Deb
Winter 2010 Amber Ale California 508,848 Deb
Winter 2010 Hefeweizen California 522,433 Ted
Winter 2010 Pale Ale California 526,729 Jun
Winter 2010 Pilsner California 504,010 Ted
Winter 2010 Porter California 426,401 Ted
Winter 2010 Stout California 430,903 Ted
Winter 2010 Amber Ale Oregon 319,614 Jun
Winter 2010 Hefeweizen Oregon 417,155 Deb
Winter 2010 Pale Ale Oregon 395,381 Kate
Winter 2010 Pilsner Oregon 385,921 Ted
Winter 2010 Porter Oregon 349,157 Kate
Winter 2010 Stout Oregon 375,737 Deb
Winter 2010 Amber Ale Washington 528,322 Ted
Winter 2010 Hefeweizen Washington 497,798 Kate
Winter 2010 Pale Ale Washington 515,122 Kate
Winter 2010 Pilsner Washington 501,404 Deb
Winter 2010 Porter Washington 518,350 Kate
Winter 2010 Stout Washington 445,582 Deb

Exercise 2

InvoiceNum Office Amount DateDue Today Difference


AG-0145 Manila 5,000.00 4/1/2011 5/5/2011 -34
AG-0189 Cebu 450.00 4/19/2011 5/5/2011 -16
AG-0220 Davao 3,211.56 4/28/2011 5/5/2011 -7
AG-0310 Manila 250.00 4/30/2011 5/5/2011 -5
AG-0355 Davao 125.50 5/4/2011 5/5/2011 -1
AG-0409 Davao 3,000.00 5/10/2011 5/5/2011 5
AG-0581 Manila 2,100.00 5/23/2011 5/5/2011 18
AG-0600 Manila 335.39 5/23/2011 5/5/2011 18
AG-0602 Davao 65.00 5/28/2011 5/5/2011 23
AG-0633 Cebu 250.00 5/30/2011 5/5/2011 25
TOTAL

Total past due days


Total past due days (array formula)

Total amount past due


Total amount past due (array formula)

Total for Manila only

Total for all except Manila

Total amount with due date beyond May 1

Total past due amount for Manila (Excel 2007 only)


Total past due amount for Manila (array formula)

Total past due amounts OR amounts for Manila (array formula)


Total past due amounts for Manila and Cebu (array formula)
390,741
Adjusted Closing Stock Prices

STOCK A B C D E F
3-Jan-12 35.3 31.94 22.26 35.7 63.72 13.23
1-Dec-11 37.68 32.06 23.39 36.5 63.42 14.64
1-Nov-11 37.62 30.74 22.38 35.15 60.32 14.18
1-Oct-11 36.19 28.62 22.22 33.92 58.11 13.03
1-Sep-11 33.91 27.52 20.02 33.38 56.07 13.94
2-Aug-11 28.51 26.53 21.25 32.4 57.83 14
1-Jul-11 30.8 27 24.3 32.86 54.73 14.61
1-Jun-11 36.4 25.53 27.51 32.02 55.16 15.43
3-May-11 30.66 25.92 28.45 30.57 55.17 14.64
1-Apr-11 25.26 26.73 25.6 29.42 53.23 15.14
1-Mar-11 24.24 28.05 27.07 29.98 49.97 13.29
2-Feb-11 22.17 27.78 29.06 31.94 53.11 13.47
2-Jan-11 23.49 25.27 30.33 32.83 52.39 14.24
1-Dec-10 22.51 24.38 31.85 30.25 50.67 15.57
3-Nov-10 21.5 25.16 33.33 27.81 48.35 12.85
1-Oct-10 21.85 24.17 32.73 28.14 49.13 11.81
2-Sep-10 17.69 22.76 27.33 28.92 48.34 10.4
1-Aug-10 16.69 21.67 28.4 28.51 48.4 11.16
1-Jul-10 15.56 22.24 24.7 27.42 50.32 10.68
2-Jun-10 16.35 21.33 20.65 27.65 50.23 10.51
1-May-10 14.92 18.11 20.66 27.49 52.8 10.04
1-Apr-10 12.39 16.53 18.24 28.21 54.52 9.85
3-Mar-10 12.01 13.98 16.14 24.42 55.98 7.12
3-Feb-10 10.43 13.16 17.1 23.03 50.74 7.88
2-Jan-10 9.1 13.77 15.51 21.99 51.65 8.63
2-Dec-09 8.18 15.55 15.42 23.14 51.74 8.72
1-Nov-09 9.14 17.88 20.67 25.57 54.93 10.67
1-Oct-09 7.46 17.27 17.11 23.81 56.41 7.93
3-Sep-09 4.78 16.84 13.74 23.25 51.92 9.08
1-Aug-09 5.14 22.65 16.49 28.23 52.14 10.9
1-Jul-09 6.59 23.6 18.56 30.15 50.32 12.48
3-Jun-09 7.38 27.13 18.05 27.2 49.99 14.71
1-May-09 8.01 28.55 27.28 28.98 58.69 16.22
1-Apr-09 7.38 27.08 28.24 29.36 60.88 14.62
1-Mar-09 9.23 26.46 30.02 34.81 61.92 15.06
1-Feb-09 7.23 24.88 28.18 35.83 58.06 13.59
2-Jan-09 8.62 25.91 34.57 34.41 54.66 13.98
3-Dec-08 8.87 25.24 31.03 37.13 56.17 14.26
1-Nov-08 7.78 25.59 32.22 35.5 55.36 17.18
1-Oct-08 5.44 24.62 24.07 33.58 54.87 14.56
4-Sep-08 4.41 25.63 20.15 34.31 52.49 15.59
1-Aug-08 5.93 28.36 27.56 37.55 49.94 17.86
2-Jul-08 8.81 27.52 29.37 39.94 51.09 22.62
1-Jun-08 9.99 25.55 28.82 44.84 47.18 21.8
1-May-08 9.06 28.59 26.61 44.84 45.78 21.63
2-Apr-08 10.09 25.97 30.43 44.41 45.23 26.18
1-Mar-08 7.88 25.07 25.9 38.31 41.01 24.72
1-Feb-08 11.9 27.76 28.12 42.4 45.63 24.45
2-Jan-08 18.66 27.72 36.41 41.92 43.37 24.78
1-Dec-07 15.03 32.11 29.58 43.71 48.93 20.39
1-Nov-07 19.82 30.1 37.45 45.04 46.57 19.79
2-Oct-07 29.32 29.08 44.26 49.81 42.61 22.72
1-Sep-07 45.5 28.32 40.88 52.54 43.45 21.92
1-Aug-07 60.75 28.04 73.64 53.16 42.53 20.79
3-Jul-07 64.35 29.73 65.64 46.87 42.76 22.9
1-Jun-07 61.94 30.9 65.73 47.93 46.81 20.76
1-May-07 56.53 33.6 61.3 47.6 41.12 21.82
3-Apr-07 65.12 35.71 62.32 47.4 37.63 24.6
1-Mar-07 85.69 35.07 64.84 46.91 32.05 20.31
1-Feb-07 79.85 29.79 55.53 39.55 32.84 18.41
26-Jan-07 80.51 35.07 48.59 40.04 38.98 22

Ave Ret
Std Dev
CAGR
Beta
GOAL SEEK
The Goal Seek function causes Excel to change a selected input value in a formula
until the formula produces a desired result. Thus, Goal Seek tells you the value of some
input necessary to reach a given goal.

Discount rate: 10.000%


Project X
Years 0 1 2 3 NPVX 154.40
Cash flow (1,000) 650 500 200 IRRX
Project Y
Years 0 1 2 3 NPVY 162.28
Cash flow -1,000.00 200.00 550.00 700.00 IRRY

Project's NPV
Project X Project Y NPV PROFILE
$500

0% $400
Pro
5% $300
ject
10% $200 X

15% $100
20% $0
25%
-$100

-$200
0 0.05 0.1 0.15 0.2 0.25
At what point will we be indifferent to the two projects:
Cost of Capital

NPVX
NPVY
Difference Use GOAL Seek to determine what rate will we
be indifferent to the two options
Pro
ject
X

0.2 0.25

al
OPTIMIZATION USING SOLVER

1)
Blue Ridge Hot Tubs manufactures and sells two models of hot tubs: the Aqua-Spa
and the Hydro-Lux. The owner of the company needs to decide how many of each type
to produce for the next production cycle. Prefabricated fiberglass hot tub shells are bought
from a local supplier and pump and tubing are added to create the hot tubs. (The supplier
has the capacity to deliver as many as the company needs). The same type of pump is installed
into both hot tubs. Each Aqua requires 9 hrs of labor and 12 ft of tubing. Each Hydro requires
6 hrs of labor and 16 ft of tubing. The company expects 1,866 hrs of production labor hours and
2,880 ft of tubing available. A CM of 350 and 300 is earned on each Aqua and Hydro respectively
The company expects to be able to sell all that it produces. There are 300 pumps available.
How many Aqua and Hydro should be produced to maximize profits?

2) Cash Flow Optimization Problem


Mexicali is a small but growing restaurant chain specializing in Mexican fast
food. The management of the company has decided to build a new location in
Quezon City, and wants to establish a construction fund (or sinking fund)
to pay for the new facility. Construction of the restaurant is expected
to take six months and cost P 40,000,000. Mexicali's contract
with the construction company requires it to make payments of P 12,500,000
at the end of the second and fourth months, and a final payment of P 15,000,000
at the end of the sixth month when the restaurant is completed. The company can
use four investment opportunities to establish the construction fund; these investments
are summarized in the following table:

Available in Months to Yield at


Investment Month Maturity Maturity
A 1, 2, 3, 4, 5, 6 1 1.8%
B 1, 3, 5 2 3.5%
C 1, 4 3 5.8%
D 1 6 11.0%

The table indicates that investment A will be available at the beginning of


each of the next six months, and funds invested in this manner mature
in one month with a yeild of 1.8%. Funds can be placed in investment C only
at the beginning of months 1 and/or 4, and mature at the end of three months with
a yeild of 5.8%.

The management of Mexicali needs to determine the investment plan that allows
them to meet the required schedule of payments while placing the least amount
of money in the construction fund.

This is a multi-period problem because a six-month planning horizon must be


considered. That is, Mexicali must plan which investment alternatives to use
at various times during the next six months.
he Aqua-Spa
many of each type
tub shells are bought
tubs. (The supplier
e type of pump is installed
ng. Each Hydro requires
production labor hours and
Aqua and Hydro respectively.
300 pumps available.

15,000,000
ompany can
ese investments
months with

an that allows
st amount

n must be
A PRODUCTION AND INVENTORY PLANNING PROBLEM

The AirComp Corporation manufactures heavy duty air compressors for the
home and light industrial markets. Upton is presently trying to plan its
production and inventory levels for the next six months. Because of seasonal
fluctuations in utilityand raw material costs, the per unit cost of producing air
compressors varies from month to month--as does the demand for air
compressors. Production capacity also varies from month to month due to
differences in the number of working days, vacations, and scheduled maintenance
and training. The following table summarizes the monthly production costs,
demands, and production capacity AirComp's management expects to face over
the next six months.

Month
1 2 3 4 5 6
Unit Production Cost 240 250 265 285 280 260
Units Demanded 1,000 4,500 6,000 5,500 3,500 4,000
Maximum Production 4,000 3,500 4,000 4,500 4,000 3,500

Given the size of AirComp's warehouse, a maximum of 6,000 units can be


held in inventory at the end of any month. The owner of the company likes to
keep at least 1,500 units in inventory as safety stock to meet unexpected
demand contingencies. To maintain a stable workforce, the company wants to
produce at no less than one half of its maximum production capacity each
month. The controller estimates that the cost of carrying a unit in any
given month is approximately equal to 1.5% of the unit production cost in the
same month. AirComp estimates the number of units carried in inventory each
month by averaging the beginning and ending inventory for each month.

There are 2,750 units currently in inventory. The company would like to identify
the production and inventory plan for the next six months that will meet the
expected demand each month while maximizing production and inventory
costs.
aintenance

e to identify
REGRESSION ANALYSIS
Using line Using Trend
Month X Actual Y Predicted Y Predicted Y Forecasted m b
Jan 1 512
Feb 2 743
Mar 3 559
Apr 4 875
May 5 755
Jun 6 890
Jul 7 663
Aug 8 934
Sep 9 1,042
Oct 10 1,102
Nov 11
Dec 12

You might also like