User Manual

Compounding Periods Different From Payment Periods
•
C = number of compounding periods per year.
•
P = number of payments periods per year.
•
i = periodic interest rate, expressed as a percentage.
•
r = i / 100, periodic interest rate expressed as a decimal.
•
i
PMT
= ((1 + r / C)
C/P
- 1)100
Investment Analysis
Lease vs. Purchase
•
PMT
p
= loan payment for purchase.
•
PMT
L
= lease payment.
•
I
n
= interest portion of PMT
p
for period n.
•
D
n
= depreciation for period n.
•
M
n
= maintenance for period n.
•
T = marginal tax rate.
•
Net purchasing advantage =
cost of leasing(n) - cost of owning(n)
(1 + i)
n
•
Cost of owning(n) = PMT
p
- T(I
n
+ D
n
) + (1 - T)M
n
Break-Even Analysis and Operating Leverage
•
GP = Gross Profit.
•
P = Price per unit.
•
V = Variable costs per unit.
•
F = Fixed costs.
•
U = number of Units.
•
OL = Operating Leverage.
•
GP = U(P - V) - F
•
OL =
U(P - V)