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					                         Income property analysis

                                       Chapter IV

Click on tabs at the bottom of your screen to navigate between worksheets


                       A very… very simple amortisation table

                                Simple mortgage table

      Including the different costs to calculate the effective rate on 36 month

       Including the different costs to calculate the effective rate on 12 month

                            Typical mortgage conditions

                         Effective mortgage cost calculator

                           Variable rate mortgage: simple

                        Variable mortgage with various costs

                              copyright Dominique Fischer-1999




                          Workbooks to support chapter VII
                                              A very simple amortisation table

                              inom       8%        Periods    OSB        PMT        INT
Nominal rate
                              rate       8%          0                         0$         0$
Periodic rate
                              years      5.00        1       100,000 $   25,046 $   8,000 $
Amortization in years
                              p/yr        1          2        82,954 $   25,046 $   6,636 $
Number of payments per year
                                t         5          3        64,545 $   25,046 $   5,164 $
Terms
                              factor     0.25        4        44,663 $   25,046 $   3,573 $
(A/P, i , n)
                              loan     100,000 $     5        23,190 $   25,046 $   1,855 $
Loan
tion table

             PRINC       OSB        Equity

                  0$    100,000 $         0$

             17,046 $    82,954 $    17,046 $

             18,409 $    64,545 $    35,455 $

             19,882 $    44,663 $    55,337 $

             21,473 $    23,190 $    76,810 $

             23,190 $          0$   100,000 $
                              Recreate your tables and rename your variables

Nominal rate                       9%

Periodic rate

Amortization in years             25.00

Number of payments per year         1

Terms                               3

(A/P, i , n)

Loan                             100,000 $
e your variables
                                   944c99f3-a943-43ee-83c6-df238ce9b22f.xls




                         Nominal rate                      I                           8.00%
                         Periodic rate                     p                           0.67%
                         Amortization in years             years                            10
                         Amortization in month             n                               120
                         Term in years                     term                              3
                         Term in month                     t                                36
                         Number of payments per year v                                      12
                         (A/P, i , n)                      ap                    1.21327594%
                         Loan                              D                        100,000 $

Month        OSB                         PMT                       INT             PRINC         OSB        Equity


         1   100,000 $                           1,213 $                 667 $         547 $     99,453 $     547 $
         2    99,453 $                           1,213 $                 663 $         550 $     98,903 $   1,097 $
         3    98,903 $                           1,213 $                 659 $         554 $     98,349 $   1,651 $
         4    98,349 $                           1,213 $                 656 $         558 $     97,792 $   2,208 $
         5    97,792 $                           1,213 $                 652 $         561 $     97,230 $   2,770 $
         6    97,230 $                           1,213 $                 648 $         565 $     96,665 $   3,335 $
         7    96,665 $                           1,213 $                 644 $         569 $     96,096 $   3,904 $
         8    96,096 $                           1,213 $                 641 $         573 $     95,524 $   4,476 $
         9    95,524 $                           1,213 $                 637 $         576 $     94,947 $   5,053 $
        10    94,947 $                           1,213 $                 633 $         580 $     94,367 $   5,633 $
        11    94,367 $                           1,213 $                 629 $         584 $     93,783 $   6,217 $
        12    93,783 $                           1,213 $                 625 $         588 $     93,195 $   6,805 $
        13    93,195 $                           1,213 $                 621 $         592 $     92,603 $   7,397 $
        14    92,603 $                           1,213 $                 617 $         596 $     92,007 $   7,993 $
        15    92,007 $                           1,213 $                 613 $         600 $     91,407 $   8,593 $
        16    91,407 $                           1,213 $                 609 $         604 $     90,803 $   9,197 $
        17    90,803 $                           1,213 $                 605 $         608 $     90,195 $   9,805 $
        18    90,195 $                           1,213 $                 601 $         612 $     89,583 $ 10,417 $
        19    89,583 $                           1,213 $                 597 $         616 $     88,967 $ 11,033 $
        20    88,967 $                           1,213 $                 593 $         620 $     88,347 $ 11,653 $
        21    88,347 $                           1,213 $                 589 $         624 $     87,723 $ 12,277 $
        22    87,723 $                           1,213 $                 585 $         628 $     87,094 $ 12,906 $
        23    87,094 $                           1,213 $                 581 $         633 $     86,462 $ 13,538 $
        24    86,462 $                           1,213 $                 576 $         637 $     85,825 $ 14,175 $
        25    85,825 $                           1,213 $                 572 $         641 $     85,184 $ 14,816 $
        26    85,184 $                           1,213 $                 568 $         645 $     84,538 $ 15,462 $
        27    84,538 $                           1,213 $                 564 $         650 $     83,889 $ 16,111 $
        28    83,889 $                           1,213 $                 559 $         654 $     83,235 $ 16,765 $
        29    83,235 $                           1,213 $                 555 $         658 $     82,576 $ 17,424 $
        30    82,576 $                           1,213 $                 551 $         663 $     81,913 $ 18,087 $
        31    81,913 $                           1,213 $                 546 $         667 $     81,246 $ 18,754 $
        32    81,246 $                           1,213 $                 542 $         672 $     80,575 $ 19,425 $
        33    80,575 $                           1,213 $                 537 $         676 $     79,898 $ 20,102 $
        34    79,898 $                           1,213 $                 533 $         681 $     79,218 $ 20,782 $
        35    79,218 $                           1,213 $                 528 $         685 $     78,533 $ 21,467 $
        36    78,533 $                           1,213 $                 524 $         690 $     77,843 $ 22,157 $

                                                     Page 6
                              944c99f3-a943-43ee-83c6-df238ce9b22f.xls
              Nominal rate
                                                                  Guess what you have to
              Periodic rate                                       do.
                                                                  (do not neglect the
              Amortization in years                               payment rounding...)
              Amortization in month
              Term in years
              Term in month
              Number of payments per year
              (A/P, i , n)
              Loan

Month   OSB                   PMT                      INT         PRINC             OSB   Equity




                                              Page 7
                      944c99f3-a943-43ee-83c6-df238ce9b22f.xls
              Nominal rate
              Periodic rate
                                                                 Now create the table
              Amortization in years                              using the Excel
              Amortization in month                              financial functions
              Term in years
              Term in month
              Number of payments per year
              (A/P, i , n)
              Loan


Month   OSB                   PMT                 INT            PRINC         OSB      Equity




                                      Page 8
                                                      944c99f3-a943-43ee-83c6-df238ce9b22f.xls
                              Computing the effective cost of a mortgage contract (here on 36 months)

Nominal rate                         8.00%    Month        OSB          PMT          INT         PRINC          OSB        Equity                    Effective flows

Periodic rate                        0.67%
Amortization in years                   30        1      100,000 $     733.77 $     666.67 $      67.10 $    99,932.90 $       67 $   $(1,500.00) -     98,500.00
Amortization in month                  360        2       99,933 $     733.77 $     666.22 $      67.55 $    99,865.35 $      135 $   $     15.00          748.77
Term in years                            3        3       99,865 $     733.77 $     665.77 $      68.00 $    99,797.35 $      203 $   $     15.00          748.77
Terms in month                          36        4       99,797 $     733.77 $     665.32 $      68.45 $    99,728.90 $      271 $   $     15.00          748.77
Number of payments per year             12        5       99,729 $     733.77 $     664.86 $      68.91 $    99,659.99 $      340 $   $     15.00          748.77
(A/P, i , n)                   0.73376457%        6       99,660 $     733.77 $     664.40 $      69.37 $    99,590.62 $      409 $   $     15.00          748.77
Loan                              100,000 $       7       99,591 $     733.77 $     663.94 $      69.83 $    99,520.79 $      479 $   $     15.00          748.77
Initial fees                        1,500 $       8       99,521 $     733.77 $     663.48 $      70.29 $    99,450.50 $      550 $   $     15.00          748.77
Monthly fees                           15 $       9       99,451 $     733.77 $     663.01 $      70.76 $    99,379.74 $      620 $   $     15.00          748.77
                                                 10       99,380 $     733.77 $     662.54 $      71.23 $    99,308.51 $      691 $   $     15.00          748.77
Effective monthly cost            0.7622%        11       99,309 $     733.77 $     662.06 $      71.71 $    99,236.80 $      763 $   $     15.00          748.77
Effective annual cost             9.5393%        12       99,237 $     733.77 $     661.58 $      72.19 $    99,164.61 $      835 $   $     15.00          748.77
                                                 13       99,165 $     733.77 $     661.10 $      72.67 $    99,091.94 $      908 $   $     15.00          748.77
                                                 14       99,092 $     733.77 $     660.62 $      73.15 $    99,018.79 $      981 $   $     15.00          748.77
                                                 15       99,019 $     733.77 $     660.13 $      73.64 $    98,945.15 $    1,055 $   $     15.00          748.77
                                                 16       98,945 $     733.77 $     659.64 $      74.13 $    98,871.02 $    1,129 $   $     15.00          748.77
                                                 17       98,871 $     733.77 $     659.15 $      74.62 $    98,796.40 $    1,204 $   $     15.00          748.77
                                                 18       98,796 $     733.77 $     658.65 $      75.12 $    98,721.28 $    1,279 $   $     15.00          748.77
                                                 19       98,721 $     733.77 $     658.15 $      75.62 $    98,645.66 $    1,354 $   $     15.00          748.77
                                                 20       98,646 $     733.77 $     657.64 $      76.13 $    98,569.53 $    1,430 $   $     15.00          748.77
                                                 21       98,570 $     733.77 $     657.14 $      76.63 $    98,492.90 $    1,507 $   $     15.00          748.77
                                                 22       98,493 $     733.77 $     656.62 $      77.15 $    98,415.75 $    1,584 $   $     15.00          748.77
                                                 23       98,416 $     733.77 $     656.11 $      77.66 $    98,338.09 $    1,662 $   $     15.00          748.77
                                                 24       98,338 $     733.77 $     655.59 $      78.18 $    98,259.91 $    1,740 $   $     15.00          748.77
                                                 25       98,260 $     733.77 $     655.07 $      78.70 $    98,181.21 $    1,819 $   $     15.00          748.77
                                                 26       98,181 $     733.77 $     654.55 $      79.22 $    98,101.99 $    1,898 $   $     15.00          748.77
                                                 27       98,102 $     733.77 $     654.02 $      79.75 $    98,022.24 $    1,978 $   $     15.00          748.77
                                                 28       98,022 $     733.77 $     653.49 $      80.28 $    97,941.96 $    2,058 $   $     15.00          748.77
                                                 29       97,942 $     733.77 $     652.95 $      80.82 $    97,861.14 $    2,139 $   $     15.00          748.77
                                                 30       97,861 $     733.77 $     652.41 $      81.36 $    97,779.78 $    2,220 $   $     15.00          748.77
                                                 31       97,780 $     733.77 $     651.87 $      81.90 $    97,697.88 $    2,302 $   $     15.00          748.77
                                                 32       97,698 $     733.77 $     651.32 $      82.45 $    97,615.43 $    2,385 $   $     15.00          748.77
                                                 33       97,615 $     733.77 $     650.77 $      83.00 $    97,532.43 $    2,468 $   $     15.00          748.77
                                                 34       97,532 $     733.77 $     650.22 $      83.55 $    97,448.88 $    2,551 $   $     15.00          748.77
                                                 35       97,449 $     733.77 $     649.66 $      84.11 $    97,364.77 $    2,635 $   $     15.00          748.77
                                                 36       97,365 $     733.77 $     649.10 $      84.67 $    97,280.10 $    2,720 $       1,313.20      99,327.07
                                                                                    effective monthly cost                                               0.7622%
                                                                                     annual effective cost                                               9.5393%




                                                                      Page 9
                                                            944c99f3-a943-43ee-83c6-df238ce9b22f.xls




                              Computing the effective cost of a mortgage contract... effect of a shorter period!




Nominal rate                          8.00%     Month            OSB              PMT          INT        PRINC       OSB        Equity                 Effective flows

Periodic rate                         0.67%

Amortization in years                    30             1         100,000 $         734 $        667 $         67 $   99,933 $       67 $ $ (1,500.00) -    98,500.00

Amortization in month                   360             2          99,933 $         734 $        666 $         68 $   99,865 $      135 $ $     15.00          748.77

Term in years                             1             3          99,865 $         734 $        666 $         68 $   99,797 $      203 $ $     15.00          748.77

Terms in month                           12             4          99,797 $         734 $        665 $         68 $   99,729 $      271 $ $     15.00          748.77

Number of payments per year              12             5          99,729 $         734 $        665 $         69 $   99,660 $      340 $ $     15.00          748.77

(A/P, i , n)                    0.73376457%             6          99,660 $         734 $        664 $         69 $   99,591 $      409 $ $     15.00          748.77

Loan                               100,000 $            7          99,591 $         734 $        664 $         70 $   99,521 $      479 $ $     15.00          748.77

Initial fees                         1,500 $            8          99,521 $         734 $        663 $         70 $   99,451 $      550 $ $     15.00          748.77

Monthly fees                            15 $            9          99,451 $         734 $        663 $         71 $   99,380 $      620 $ $     15.00          748.77

                                                    10             99,380 $         734 $        663 $         71 $   99,309 $      691 $ $     15.00          748.77

Effective monthly cost             0.9352%          11             99,309 $         734 $        662 $         72 $   99,237 $      763 $ $     15.00          748.77

Effective annual cost             11.8182%          12             99,237 $         734 $        662 $         72 $   99,165 $      835 $ $ 1,338.16       101,236.54

                                                                                            effective monthly cost                                          0.9352%

                                                                                             annual effective cost                                         11.8182%




                                                                              Page 10
                                         February, 2000 typical mortgage conditions, Perth



                                         Basic                               Standard              Fixed    Rates

       Owner Occupied Housing          Variable       Intro      Intro       Variable     1-Year   3-Year   5-Year     Fees
                                        Rate          Rate       Term         Rate         Term     Term     Term

AMP Banking                                          6.39f        1yr           7.2         7.7    8.45                $600
ANZ Bank                                  6.7         6.4         1yr           7.3         7.4    8.05      8.4       $600
ANZ Direct                                6.7                                   7.0         7.3    7.95      8.3       $600
Aussie Home Loans                                                               7.2        7.75     8.5     8.75       $600
AXA Home Loans                                                                 6.49         7.0     7.8      8.1        $0
Bank of New Zealand                      6.69        6.05f        1yr           7.3        7.15     7.8     8.15       $600
BankWest                                 6.74         6.3         1yr           7.3         7.3     7.8      8.2       $500
Challenge Bank                           6.74        6.35f        1yr           7.3        7.25     7.9      8.3       $600
Commonwealth Bank                        6.74        6.49f        1yr           7.3         7.3    7.65      8.2      $0-$600
GIO Building Society                     6.35                                  6.45         7.6     8.3      8.5       $250
Home Building Society                    6.85        6.19f        1yr           7.3        7.25    7.95      8.4       $500
HSBC                                                  6.45        1yr           7.2        7.39    7.89     8.35       $500
National Australia Bank                  6.84        5.49f        6m            7.3        7.59    7.99     8.39       $600
RAMS Home Loans                          6.44         6.1         1yr           7.3                 8.5     8.75       $595
Real Home Loans                                                                6.35                 7.7     7.92       $595
Super Members' Home Loans                                                       6.2         7.5     8.5     8.75        $0
St. George Bank                          6.74         6.45        1yr           7.3         7.1     7.7     8.05       $600
WA Home Loans                            5.75         6.2         1yr           6.7         7.5     7.9      8.4     $695-$950

Monthly service fee may also apply for certain institutions
#Conditions apply f= fixed, c=capped v=variable
To update this information consult     http://www.bankchoice.com.au
                                                                         Keep this information
                                                                         as fresh as possible
                                             944c99f3-a943-43ee-83c6-df238ce9b22f.xls


          Create your info. Build a full table and then, in the same sheet, observe the results of changing the term...


Nominal rate                              Month     OSB          PMT           INT      PRINC   OSB   Equity       Effective flows

Periodic rate
Amortization in years
Amortization in month
Term in years
Terms in month
Number of payments per year
(A/P, i , n)
Loan
Initial fees
Monthly fees

Effective monthly cost
Effective annual cost




                                                             Page 12
                                             Mortgage effective cost calculator
                        944c99f3-a943-43ee-83c6-df238ce9b22f.xls


Requires the use of the goal seeking function from Total Present value (cell H11) to equate the Effective Loan (cell H4) and
                the effective monthly cost (cell H13). The present example is the one offered in the textbook (p.61)



Loan                            P
nominal rate                    inom
conversions                     c_
number of payments              v
amortisation in years           n
term                            t
monthly periodic rate           pm
effective rate                  ie
monthly payment                 PMT
OSB t                           St
Initial fees                    if
periodic in line fees           pf
insurance premium               ip
penalty                         pen
(number of month of interest)
Magic formula                   PV




                   Another way to present this information


                                Nominal conditions


                                         100 000.00 $
Loan
                                                     8%
Rate
                                             733.76 $
Monthly payment
                                          97 280.15 $
OSB




                                       Page 13
            Mortgage effective cost calculator 944c99f3-a943-43ee-83c6-df238ce9b22f.xls


eking function from Total Present value (cell H11) to equate the Effective Loan (cell H4) and changing
monthly cost (cell H13). The present example is the one offered in the textbook (p.61)



                                  100 000.00 $        Effective loan                     98 500.00 $
                                          8.00%       Monthly charge                         748.76 $
                                                 12   Oustanding balance                 97 280.15 $
                                                 12   Penalty                              1 298.20 $
                                                 30   Terminal payment                   98 578.35 $
                                                  3   PV of montly charge                23 496.31 $
                                        0.6667%       PV of terminal payment             75 003.69 $
                                        8.3000%       Total present value                98 500.00 $
                                    733.7646 $
                                    97 280.15 $       effective montly cost                  0.7621%
                                        500.00 $      effective annual cost                  9.5384%
                                         15.00 $
                                               1.0%
                                                  2


                                  100 000.00 $




y to present this information


                        Effective conditions


                                    98 500.00 $

                                    ?

                                        748.76 $

                                    98 578.35 $




                                                                               Page 14
                        Mortgage effective cost calculator creative practice
                               944c99f3-a943-43ee-83c6-df238ce9b22f.xls




Loan                            P
nominal rate                    inom
conversions                     c_
number of payments              v
amortisation in years           n
term                            t
monthly periodic rate           pm
effective rate                  ie
monthly payment                 PMT
OSB t                           St
Initial fees                    if
periodic in line fees           pf
insurance premium               ip
penalty                         pen
(number of month of interest)
Magic formula                   PV




                                            Page 15
ive cost calculator creative practice    944c99f3-a943-43ee-83c6-df238ce9b22f.xls




                Effective loan
                Monthly charge
                Oustanding balance
                Penalty
                Terminal payment
                PV of montly charge
                PV of terminal payment
                Total present value


                effective montly cost
                effective annual cost




                                                         Page 16
                                           944c99f3-a943-43ee-83c6-df238ce9b22f.xls




                                            A simple variable mortgage schedule


Loan                          100,000 $   Month Annual rates         OSB           PMT            INT         PRINC              OSB           Flows

Amortization in years               10                                                                                                          -100000
Amortization in month              120        1         6.5          100,000   $      1,135   $     542   $      594   $         99,406    $     1,135 $
Term in years                        3        2         6.6           99,406   $      1,141   $     547   $      594   $         98,812    $     1,141 $
Terms in month                      36        3         6.8           98,812   $      1,151   $     560   $      591   $         98,222    $     1,151 $
Number of payments per year         12        4         6.4           98,222   $      1,131   $     524   $      607   $         97,615    $     1,131 $
                                              5         6.5           97,615   $      1,136   $     529   $      607   $         97,008    $     1,136 $
                                              6         6.9           97,008 $        1,155 $       558 $        598 $           96,411 $        1,155 $
Monthly effective cost        0.5719%         7         6.5           96,411   $      1,136   $     522   $      614   $         95,797    $     1,136   $
Annual effective cost         7.0829%         8         6.5           95,797   $      1,136   $     519   $      617   $         95,180    $     1,136   $
                                              9         6.5           95,180   $      1,136   $     516   $      620   $         94,560    $     1,136   $
                                             10         6.7           94,560   $      1,145   $     528   $      617   $         93,943    $     1,145   $
                                             11         6.8           93,943   $      1,150   $     532   $      618   $         93,325    $     1,150   $
                                             12         6.9           93,325   $      1,155   $     537   $      618   $         92,707    $     1,155   $
                                             13         6.8           92,707   $      1,150   $     525   $      625   $         92,082    $     1,150   $
                                             14         6.4           92,082   $      1,132   $     491   $      640   $         91,442    $     1,132   $
                                             15         6.7           91,442   $      1,145   $     511   $      635   $         90,807    $     1,145   $
                                             16         6.8           90,807   $      1,150   $     515   $      635   $         90,172    $     1,150   $
                                             17         6.9           90,172   $      1,154   $     518   $      636   $         89,536    $     1,154   $
                                             18           7           89,536   $      1,159   $     522   $      637   $         88,899    $     1,159   $
                                             19         7.1           88,899   $      1,163   $     526   $      637   $         88,262    $     1,163   $
                                             20         7.2           88,262   $      1,168   $     530   $      638   $         87,624    $     1,168   $
                                             21         7.3           87,624   $      1,172   $     533   $      639   $         86,985    $     1,172   $
                                             22         7.4           86,985   $      1,177   $     536   $      640   $         86,344    $     1,177   $
                                             23         7.5           86,344   $      1,181   $     540   $      641   $         85,703    $     1,181   $
                                             24         7.6           85,703   $      1,185   $     543   $      642   $         85,061    $     1,185   $
                                             25         7.5           85,061   $      1,181   $     532   $      649   $         84,411    $     1,181   $
                                             26         7.4           84,411   $      1,177   $     521   $      656   $         83,755    $     1,177   $
                                             27         7.3           83,755   $      1,173   $     510   $      663   $         83,092    $     1,173   $
                                             28         7.2           83,092   $      1,168   $     499   $      670   $         82,422    $     1,168   $
                                             29         7.1           82,422   $      1,164   $     488   $      677   $         81,745    $     1,164   $
                                             30           7           81,745   $      1,160   $     477   $      683   $         81,062    $     1,160   $
                                             31         6.9           81,062   $      1,156   $     466   $      690   $         80,372    $     1,156   $
                                             32         6.8           80,372   $      1,152   $     455   $      697   $         79,675    $     1,152   $
                                             33         6.7           79,675   $      1,148   $     445   $      704   $         78,971    $     1,148   $
                                             34         6.6           78,971   $      1,145   $     434   $      710   $         78,261    $     1,145   $
                                             35         6.5           78,261   $      1,141   $     424   $      717   $         77,544    $     1,141   $
                                             36         6.4           77,544   $      1,137   $     414   $      723   $         76,821    $    77,958   $

                                                                                                                           irr (monthly)       0.5719%

                                                                                                                           IRR                 7.0829%




                                                           Page 17
                                                            944c99f3-a943-43ee-83c6-df238ce9b22f.xls
                                                            A variable mortgage schedule with fees


Loan                          100,000 $   Month   annual rates      OSB             PMT         INT        PRINC       OSB          Equity           Goodies     Effective flows

                                                                                                                                                 $    (800.00)        -99,200 $
Amortization in years               10        1            6.5      100,000   $     1,135   $    542   $     594   $   99,406   $      594   $   $      15.00    $    1,150.48
Amortization in month              120        2            6.6       99,406   $     1,141   $    547   $     594   $   98,812   $    1,188   $   $      15.00         1,155.54
Term in years                        3        3            6.8       98,812   $     1,151   $    560   $     591   $   98,222   $    1,778   $   $      15.00         1,165.62
Term in month                       36        4            6.4       98,222   $     1,131   $    524   $     607   $   97,615   $    2,385   $   $      15.00         1,145.66
Number of payments per year         12        5            6.5       97,615   $     1,136   $    529   $     607   $   97,008   $    2,992   $   $      15.00         1,150.60
                                              6            6.9       97,008   $     1,155   $    558   $     598   $   96,411   $    3,589   $   $      15.00         1,170.30
Initial fees                     800 $        7            6.5       96,411   $     1,136   $    522   $     614   $   95,797   $    4,203   $   $      15.00         1,150.74
Monthly fees                      15 $        8            6.5       95,797   $     1,136   $    519   $     617   $   95,180   $    4,820   $   $      15.00         1,150.74
                                              9            6.5       95,180   $     1,136   $    516   $     620   $   94,560   $    5,440   $   $      15.00         1,150.74
                                             10            6.7       94,560   $     1,145   $    528   $     617   $   93,943   $    6,057   $   $      15.00         1,160.27
                                             11            6.8       93,943   $     1,150   $    532   $     618   $   93,325   $    6,675   $   $      15.00         1,165.02
Monthly effective cost        0.6504%        12            6.9       93,325   $     1,155   $    537   $     618   $   92,707   $    7,293   $   $      15.00         1,169.73
Annual effective cost         8.0895%        13            6.8       92,707   $     1,150   $    525   $     625   $   92,082   $    7,918   $   $      15.00         1,165.05
                                             14            6.4       92,082   $     1,132   $    491   $     640   $   91,442   $    8,558   $   $      15.00         1,146.60
                                             15            6.7       91,442   $     1,145   $    511   $     635   $   90,807   $    9,193   $   $      15.00         1,160.31
                                             16            6.8       90,807   $     1,150   $    515   $     635   $   90,172   $    9,828   $   $      15.00         1,164.86
                                             17            6.9       90,172   $     1,154   $    518   $     636   $   89,536   $   10,464   $   $      15.00         1,169.39
                                             18              7       89,536   $     1,159   $    522   $     637   $   88,899   $   11,101   $   $      15.00         1,173.88
                                             19            7.1       88,899   $     1,163   $    526   $     637   $   88,262   $   11,738   $   $      15.00         1,178.35
                                             20            7.2       88,262   $     1,168   $    530   $     638   $   87,624   $   12,376   $   $      15.00         1,182.79
                                             21            7.3       87,624   $     1,172   $    533   $     639   $   86,985   $   13,015   $   $      15.00         1,187.20
                                             22            7.4       86,985   $     1,177   $    536   $     640   $   86,344   $   13,656   $   $      15.00         1,191.58
                                             23            7.5       86,344   $     1,181   $    540   $     641   $   85,703   $   14,297   $   $      15.00         1,195.94
                                             24            7.6       85,703   $     1,185   $    543   $     642   $   85,061   $   14,939   $   $      15.00         1,200.26
                                             25            7.5       85,061   $     1,181   $    532   $     649   $   84,411   $   15,589   $   $      15.00         1,195.98
                                             26            7.4       84,411   $     1,177   $    521   $     656   $   83,755   $   16,245   $   $      15.00         1,191.74
                                             27            7.3       83,755   $     1,173   $    510   $     663   $   83,092   $   16,908   $   $      15.00         1,187.55
                                             28            7.2       83,092   $     1,168   $    499   $     670   $   82,422   $   17,578   $   $      15.00         1,183.42
                                             29            7.1       82,422   $     1,164   $    488   $     677   $   81,745   $   18,255   $   $      15.00         1,179.33
                                             30              7       81,745   $     1,160   $    477   $     683   $   81,062   $   18,938   $   $      15.00         1,175.28
                                             31            6.9       81,062   $     1,156   $    466   $     690   $   80,372   $   19,628   $   $      15.00         1,171.29
                                             32            6.8       80,372   $     1,152   $    455   $     697   $   79,675   $   20,325   $   $      15.00         1,167.34
                                             33            6.7       79,675   $     1,148   $    445   $     704   $   78,971   $   21,029   $   $      15.00         1,163.45
                                             34            6.6       78,971   $     1,145   $    434   $     710   $   78,261   $   21,739   $   $      15.00         1,159.59
                                             35            6.5       78,261   $     1,141   $    424   $     717   $   77,544   $   22,456   $   $      15.00         1,155.79
                                             36            6.4       77,544   $     1,137   $    414   $     723   $   76,821   $   23,179   $       1,240.71        79,198.56
                                                                                                                                                 irr                  0.6504%
                                                                                                                                                 IRR                  8.0895%




                                                                          Page 18
                                                       944c99f3-a943-43ee-83c6-df238ce9b22f.xls




  Recreate a variable rate schedule including various goodies and try to use recent realistic rates (rates can be found in many places on the Net... keep looking)




Loan                                                  Month Annual rates           OSB            PMT            INT          PRINC          OSB          Flows


Amortization in years
Amortization in month
Term in years
Terms in month
Number of payments per year
Goodies:




Monthly effective cost
Annual effective cost




                                                                         Page 19
      Favourable financing conditions (textbook example)


Vendor financing

Contractual value                  100,000 $
Bank mortgage loan                  60,000 $
Down Payment                        10,000 $
Shorfall financed by vendor         30,000 $
At vendor's favourable rate                4% interest only
Market rate                                7%
Term                                         3 years


vendor periodic rate                     0.33%
market periodic rate                     0.58%
term                                        36


PMTv                                     100 $
OSB                                 30,000 $


Montly payment on favourable mortgage    100 $
Outstanding balance                 30,000 $
Market value of this loan           27,571 $
"loss to the vendor"                    2,429 $
  Favourable financing conditions: invent a new story


Vendor financing

Contractual value
Bank mortgage loan
Down Payment
Shorfall financed by vendor
At vendor's favourable rate
Market rate
Term                                years


vendor
market
term


PMTv
OSB


Montly payment on favourable mortgage
Outstanding balance
Market value of this loan
"loss to the vendor"

				
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