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.
•iPMT = ((1 + r / C)C/P - 1)100
Investment Analysis
Lease vs. Purchase
•PMTp = loan payment for purchase.
•PMTL = lease payment.
•In = interest portion of PMTp for period n.
•Dn = depreciation for period n.
•Mn = maintenance for period n.
•T = marginal tax rate.
•
k |
| |
Net purchasing advantage = | cost of leasing (n) - cost of owning (n) | |
(1 + i)n | ||
∑ | ||
n = 1 |
|
•Cost of owning(n) = PMTp - T(In + Dn) + (1 - T)Mn
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) |
