Premium Essay

Financial Modeling

In: Business and Management

Submitted By Christinexy
Words 258
Pages 2
Com3FD3 - Assignment 1
Due 11:00 p.m. Thursday October 2, 2014

Quick Buck Financial is launching a new product. The product is a two-year, partial amortization, new car loan, intended to help restore the customer's credit rating. The amortization period is between six and ten years depending on customer preference and previous credit history. To make things easy for their intended customers, they will have twice monthly payments (on the 15th and last day of the month), to better align with their pay checks. Interest will be charged on the basis of an APR with monthly compounding (mentioned in the fine print). The amount of the loan will be between $15,000 and $40,000 based on the expected professional clientele. If they want to borrow more or less, they will have to use a different product. Required: Build an amortization table model that handles the above constraints and offers an interest rate between 9% and 11.5% APR* in increments of 25 basis points (¼ of 1%). Required outputs of; required semi-monthly payment, balance owing at the end of the term, and total interest paid must be shown to the client. The model should not accept any input that does not conform to the loan details. Assume that the users are experienced with Excel and that they will be showing the model to potential clients.

*Annual percentage rate with monthly compounding.
A basis point is one percent of one percent or 0.0001. Semi-monthly means twice a month, 24 payments per year.…...

Similar Documents

Premium Essay

Financial Modeling

...A tutorial in managerial accounting concepts and financial modeling using Excel Assignment 1: Introduction We will begin our work this semester with a case called Caribbean Internet Café [hereafter, CIC]. In the CIC case, David Grant wants to open an Internet Café in Kingston, Jamaica. This simple business setting is familiar; how many coffee shops, drive-up or otherwise, can you think of that are within walking distance of campus? Even if you are not a coffee-holic, the operation of one of these places should be fairly self-evident. This assignment will help to fulfill a number of major objectives of the course: 1. The CIC case makes use of a relatively familiar context in which to introduce many of the managerial accounting concepts we will deal with this semester. The familiarity of the context should enable you to associate managerial accounting terminology with real world phenomena. 2. The structure of this series of exercises also provides an opportunity to develop your skills in using Excel to do financial modeling. Irrespective of your preferences for a career choice, financial modeling will be a critical skill in your professional life. Marketers and HR specialists take note: there is no avoiding the numbers. 3. The majority of you are still relatively early in your path through the School of Business program. Case analyses will be an important element in several of your subsequent courses. One key to successful case analysis is meticulous organization of......

Words: 5100 - Pages: 21

Premium Essay

Financial Modeling

...Week 5 Assignment Question 1 In a poll of 600 voters in a campaign to eliminate non-returnable beverage containers, 210 of the voters were opposed. Develop a 92% confidence interval estimate for the proportion of all the voters who opposed the container control bill. Question 2 A random sample of 87 airline pilots had an average yearly income of $99,400 with a standard deviation of $12,000. 1 If we want to determine a 95% confidence interval for the average yearly income, what is the value of t? 2 Develop a 95% confidence interval for the average yearly income of all pilots. Question 3 In order to determine the average weight of carry-on luggage by passengers in airplanes, a sample of 25 pieces of carry-on luggage was collected and weighed. The average weight was 18 pounds. Assume that we know the standard deviation of the population to be 7.5 pounds. 1 Determine a 97% confidence interval estimate for the mean weight of the carry-on luggage. 2 Determine a 95% confidence interval estimate for the mean weight of the carry-on luggage. Question 4 A statistician employed by a consumer testing organization reports that at 95% confidence he has determined that the true average content of the Uncola soft drinks is between 11.7 to 12.3 ounces. He further reports that his sample revealed an average content of 12 ounces, but he forgot to report the size of the sample he had selected. Assuming the standard deviation of the population is 1.28,......

Words: 266 - Pages: 2

Premium Essay

Advanced Financial Modeling

...Problem Set 1: Options 1. The strike price of a call option on GM common stock is $50. a) What is the payoff at expiration of this call if, on the expiration date, GM stock sells for $45? b) What is the payoff at expiration of this call if, on the expiration date, GM stock sells for $55? c) Draw the payoff diagram for this option. 2. Use the Black-Scholes model to price a call with the following characteristics: Stock price = $65 Strike price = $70 Time to expiration = 120 days Stock price variance = 0.35 Risk-free interest rate = 0.05 3. Suppose there is a call option on Go-East Airlines with a strike price of $22. Today’s date is May 3, 2015 and the call expires on May 18, 2015. The current risk free rate on a T-bill that matures the on the option’s expiration day is 1.8%, annualized. Go-East Airlines’ stock is currently trading $23 per share. The historical standard deviation for the stock is 22%. Assume that the option is European and that Go-East does not pay dividends. a) Use the Black-Scholes option pricing formula to determine the value of the call option. b) What is the value of a put option on Go-East Airlines that matches in maturity and strike price? 4. On August 7 2015, the Nokia Corporation’s stock traded at $15.36. At the time the stock price was quoted, the most actively traded option for this stock was a call option with September 2015 maturity and a strike price of $17.50. Assume that the option matures in...

Words: 384 - Pages: 2

Free Essay

Jp Financial Modeling

...Effect of Industry Characteristics on Financial Statement Relationships. There are various strategies for approaching this problem. One strategy begins with a particular company, identifies unique financial characteristics (for example, electric utilities have a high proportion of property, plant and equipment among their assets), and then searches the common-size data to identify the company with that unique characteristic. Another approach begins with the common-size data, identifies unusual financial statement relationships (for example, Firm (10) has a high proportion of receivables), and then looks over the list of companies to identify the one most likely to have substantial receivables among its assets. We follow both strategies here. Firm (10) has a high proportion of receivables among its assets and substantial borrowing in its capital structure. This balance sheet structure is typical of the finance company, HSBC Finance. Why do the capital markets allow a finance company to have such a high proportion of borrowing in its capital structure? The answer is threefold: (1) finance companies have contractual rights to receive cash flows in the future from borrowers; the cash flow tends to be highly predictable, (2) finance companies lend to many different individuals, which diversifies their risk, and (3) borrowers often pledge collateral to back up the loan, which provides the finance companies with an alternative for collecting cash if borrowers default on their loans...

Words: 1900 - Pages: 8

Premium Essay

Analysis Hung Vuong Group

...2013 INDIVIDUAL ASSIGNMENT NAME: ID: LECTURER: TOPIC: TRAN HUYNH NHU SB60381 CLASS: SB0765 DINH TIEN THANH VALUATION AND FINANCIAL MODELING NHUTHSB60381 VALUATION FINANCIAL MODELING INDIVIDUAL ASSIGNMENT I. EXECUTIVE Through this report, I will analyze and evaluate Hung Vuong Joint Stock Company’s price and compare with the 10 other companies in the same industry. To evaluate the value stock of enterprises, we have a lot of methods, such as: Dividend Discount Model (DDM), price to earnings (PE) or market price to book value (PB)… Each method has its pros and cons. However, in this report, I will evaluate stock price in three methods: PE, PS and PB. In this report, there are three main parts: overview the foods industry and background of HVG, valuation of stock price and give some comment about these methods. II. OVERVIEW FOODS INDUSTRY AND HUNG VUONG JOINT STOCK COMPANY 1. Overview foods industry After becoming a member of WTO, Vietnam has more opportunities for foods industry. However, with the advantages, foods industry in Vietnam has also faced with a lot of challenges. Foods industry in Vietnam develops very quickly with two types: domestic foods and exported foods. With the local consumers, with the variety, there are a 1 NHUTHSB60381 VALUATION FINANCIAL MODELING INDIVIDUAL ASSIGNMENT lot of types of foods. Moreover, in fact, when Vietnam joined WTO and ASEAN, it promotes foods exported and agriculture and maritime products. In recent years, even though......

Words: 1838 - Pages: 8

Premium Essay


...Required Textbook: 1. Financial Modeling by Simon Benninga, MIT Press, Third edition. Other Recommended Books: 1. Corporate Finance, Stephen A. Ross, Randolph W. Westerfield, and Jeffrey Jaffe (RWJ), Irwin/McGraw-Hill. (you should have this from the core class). 2. Damodaran on Valuation, Wiley. 3. Spreadsheet Modeling in Corporate Finance by Craig Holden, Prentice Hall. 4. Analysis for Financial Management, Robert C. Higgings, Irwin/McGraw-Hill. 5. MBA’s Guide to Microsoft Excel 2000, Stephen L. Nelson, Redmond Technology Press. Course Packet: The course packet contains the cases that will be assigned during the semester. Assignments and lecture notes will be distributed in class. Exams: There will be one take-home final exam. The final exam will be based on spreadsheets built using techniques for financial modeling developed throughout the course. The exam will require individual ability to perform advanced financial modeling using a spreadsheet. Class Participation: A vibrant class discussion will raise the level of enjoyment and learning for all of us. Therefore, it will help if you take the time to prepare and do the readings before the class. You should read the assigned chapters before coming to the lectures. In addition to discussing the material, you should also be familiar with the modeling techniques and spreadsheet tools used in each class. Grading Policy: 1. Late assignments are never accepted for credit unless there are extenuating......

Words: 460 - Pages: 2

Premium Essay

Business Plan

...Cahill MEGA MODELING AGENCY * History: Mega Modeling Agency was found back in 2010 when Ms. Jolesa Graham graduated from Modeling school and decided that she wanted to make a change in the modeling world. She went out on faith, praying and hoping that she would be able to go out and start this agency and that it would be overly successful. When she realized that this was what she really wanted to do her parents raised money and help her to begin this wonderful agency. * Mission: Our duty is to encourage young men and women. Let them know that looks, age, weight, and height don’t matter. We believe that every female/male is beautiful in their own way and can be used in different ways in the modeling world. Show them that anything is possible when you believe and it’ll happen once you believe. * Vision: The vision that is set forth is that this Agency would become the biggest most successful agency in the world. To be well known on television, radio, and that the name would continue to grow and each person that join will be happy they did and just as successful as the company name. * Company History: This company has no experience, but the owner has experience from visiting many Modeling Agency Expos and Fashion shows * Company Founding: The company founding goes back to the history after graduating from John Casablancas Modeling Career that’s when the owner, Jolesa Graham decided to take a step out and start this Agency. * Financial Highlights:......

Words: 566 - Pages: 3

Free Essay

The Real Option Theory

...Managerial Finance | Use of Real Options Theory in Financial Management/Modeling | Tiffany Allen | BUS 650 | Prof. Achilles | 11/14/2011 | | Abstract In business, as in life, you always have options to choose from. In today's extremely unstable market, managers realize how incredibly risky some investment opportunities can be, and how useful a flexible strategy can be. Using real options theory, managers can more effectively analyze opportunities to pursue, delay, modify, or abandon projects as events unfold. This paper analyzes the use of real option theory in financial   management and modeling. It discusses issues included in the implementation of the theory in financial management and modeling. It explains new  learning  in  real  option  theory  and a case study that was able to apply the theory along with the application of the theory to my current business which has  helped me understand real option theory. Use of Real Options Theory in Financial Management/Modeling The Real Option Theory has struck some interest with managers in the last couple of decades. Back in the day, companies had plenty of time to make decisions to make changes when they felt it was necessary. Now, if they take their time deciding on changes, chances are by the time they finally make a decision, another company has already made the move. Times have change and especially with how the economy is today, it’s a “Dog Eat Dog World” and in this competitive market,......

Words: 2959 - Pages: 12

Free Essay


...International Economics International Finance, Computer Application in Finance, Risk Management, and Investments. EXPERIENCE Financial Analyst: KPMG Financial Advisory Services, Riyadh Feb2007 -March2009 Have joined KPMG Advisory, Riyadh office in May 2007, and have been promoted within a year and was involved in many projects in different industries. The key projects includes; Capital restructuring: Leading Telecom Company in the Middle East Assists the client in setting the optimal capital structure that improvers the business. Researched listed telecom companies to benchmark the existing capital structure of the client. Made the presentations pack which was used at the board meeting for approval of the new capital structure. Valuation: Bottled water Company Valuation assignment based on discounted cash flow methodology. Conducted secondary market research to assist in deriving financial forecast assumptions. Assisted in financial modeling and in preparing the valuation memorandum. Feasibility study and Fund raising: Plastic Packaging Project Work on preparing information package for Saudi Industrial Fund. Help generating the financial model assumption. May 2000 • • • • • • • • Credit collection: Cleopatra Company (Summer Internship), Riyadh TRAINING & COURSES • • • • • • • Valuation and financial modeling, Shrjah ,UAE Essential financial modeling in Dubai, UAE Introductory classes in using Bloomberg terminal Short courses at the university include:......

Words: 316 - Pages: 2

Premium Essay


...Financial Modeling Copyright 2009 Investment Banking Institute Table of Contents I. Introduction II. Spreading Historical Financial Statements III. Deriving Historic Ratios, Trends and Variables IV. Financial Statement Projections V. Integration of Financial Statement Projections / Revolver Modeling 2 Introduction Uses for Financial Models in Investment Banking and Private Equity Investment bankers and Private Equity Professionals often must create financial models that illustrate historic financial statements along with integrated income statement, balance sheet and cash flow projections for evaluating various types of transactions such as: Sale of the Company Merger of the Company Public or Private Placement of new capital (bank loans, high yield issue, IPO or secondary equity offering, private equity or debt placement, etc.) Leveraged buyouts / Management buyouts Restructuring / Bankruptcy In these cases, the associate or analyst is expected to construct the financial model with guidance from the management team on assumptions and projections. Typically, the associate and analyst are responsible for “running the model”, including the ability to run base-case, upside, downside and alternate capital structure scenarios. For pitches and other cases where there is no access to the management team, projections from research reports (equity research reports, high yield research reports, credit rating agency reports, etc) can be......

Words: 2574 - Pages: 11

Premium Essay


...Nestlé Improves Its Financial Reporting with Management Science Christophe Oggier Nestlé Venezuela S.A., Edificio Polar, Plaza Venezuela, Los Caobos, Apartado 3367, Caracas 1010-A, Venezuela, Emmanuel Fragnière School of Management, Bath University, Bath BA2 7AY, United Kingdom, Jeremy Stuby Lombard Odier Darier Hentsch & Cie, 11 Rue de la Corraterie, 1204 Geneva, Switzerland, Nestlé’s executive information system (EIS) department gathers data from the firm’s subsidiaries (reporting units) to provide top management with operational, financial, and strategic information. In 1996, the EIS department decided to improve its service by using business analytics tools based on management science (MS) techniques. It wanted to encourage analysts and controllers to make better use of the information supplied. We developed four OR modules: sensitivity analysis, forecasting, simulation, and optimization, and integrated them into a more global modeling scheme for evaluating the economic profitability of Nestlé’s projects and more generally evaluating the value of the Nestlé group and its multifocal businesses. Disseminating this approach within the Nestlé group through training and internal consulting has been a long and important process that has increased the number of managers accustomed to quantitative decision making and established new reporting protocols imposing the use of MS models. Key......

Words: 490 - Pages: 2

Free Essay

Portfolio Modeling and Evaluation

... Portfolio  Modeling  and  Evaluation:   Beating  the  Market       ABSTRACT     During  the  period  of  2005  to  2010,  the  market  portfolio  (P1)  and  one   suggested  portfolio  (P3)  post  a  positive  absolute  return  of  0.80%  and  0.82%   respectively  which  underperformed  the  active  fund  portfolio  (P2)  0.91%.  This   report  follows  various  modeling  methods  in  order  to  back  test  the   performance  of  the  active  fund  portfolio  and  compare  its  performance  with   that  of  two  other  portfolios.  The  findings  indicate  that,  even  though  P2   achieves  the  highest  return  on  the  overall  performance,  the  limitations  such  as   the  macro  environment,  the  assumptions  set,  and  the  Shrinkage  method  used   that  accidentally  downsizes  some  valuable  stocks  in  out-­‐samples  as  they  are   closely  correlated  are  being  ignored.  By  contrast,  P3  will  probably  offer  a   “middle-­‐choice”  which  will  bring  a  promising  and  more  stable  return.                 1 ......

Words: 5765 - Pages: 24

Free Essay


...mohsikhan1 Dynamic and enthusiastic professional with nearly 2 years of proven work experience in accounts, client relations and customer service within diversified industries. Career record of achieving set goals and consistent work performance on the basis of dedicated work approach. Ability to work under pressure, effectively meet deadlines and maintain strict confidentiality of documents. Dedicated team player who possesses excellent analytical, problem solving, communication and interpersonal skills. On visit visa with and available for immediate employment. * STRENGTHS * Well experienced Professional * General Ledger preparation * Receivables-Payables Handling * Trained in QuickBooks, Advanced Excel & Financial Modeling * Competencies in Accounting Functions * Excellent Numerical & Computing skills * Possess strong Team playing attitude * Excellent command over spoken & written English(IELTS 5.5) * QUALIFICATIONS * CMA (Certified Management Accountant-US) Processing... Institute of Business Leadership (IBL)-Islamabad (Pak) * PEARSON EXTENDED LEVEL 7 (Pearson Extended Level 7 Diploma in Strategic Management & Leadership (QCF- UK) in Sep 2015) Institute of Business Leadership (IBL)-Islamabad (Pak) * PEARSON PGD Level 7 (Pearson BTEC PGD Level 7 Diploma in Strategic Management & Leadership (QCF- UK) in April 2015) Institute of Business......

Words: 569 - Pages: 3

Premium Essay

Valuation of Bonds

...ABSTRACT The purpose of this research is to attempt to understand to what degree accounting information can serve as a valid predictor of future financial performance. It is understood and often disputed that predicting financial performance beyond a time horizon of four years, using accounting analysis is not as reliable as initially determined. Based on both academic research studies and reviews alongside nonacademic reviews, it seems plausible to a certain comfortable level that it is possible to incorporate targeted and focused accounting information and ratios in conjunction with additional industry/market based variables within statistical models to be successful in predicting future performance beyond the short run. Financial ratios, together with other analyses, are widely used as critical indicators in evaluating a firm’s performance. One question constantly arises, which financial ratios are informative among the hundred ratios available? Material below will identify and support particular ratios of focus. Research also suggests that in order to accurately forecast future financial performance, accounting information needs to work alongside other variables (i.e. firm size, economic trends, and industry specific ratios). Beyond the microeconomics of the company, analysis should also consider relevant macroeconomics that can have a direct correlation on a firm’s success. Based on all findings included, there has been no distinct criticism of using accounting......

Words: 2240 - Pages: 9

Premium Essay

"Enterprise Level Data Work Flows and Data Warehouse

...7 4 Difference between OLTP and OLAP 9 5 Data Modeling 13 6 Workflows in Enterprise level Data warehousing 18 7 Business Intelligence tools used in Data flow and Data Warehousing 21 8 Analysis in Data warehousing 24 9 Conclusion 28 10 Foot Note 30 11 References 31 ABSTRACT These days majority of the applications, may it be web applications or windows applications or mobile applications, are completely database dependent. Most of the application developments are becoming database driven environments, hence rendering databases as one of the most key elements in a software environment. This dependency on databases can attributed to the increasing number of data requirements from the users. A large amount of data has to be stored and it should be stored at a different level of granularity. In order to achieve this, a specific methodology has to be followed in order to store, retrieve and analyze data at different levels. Basic Idea of the Research: The basic idea of the Research is to find out the different methodologies, different environments and different tools used to store, retrieve and analyze data at different levels. This includes some preliminary research on both OLTP and OLAP environments, differences between these two environments, data modeling concepts, how data flows to a data warehouse environment and different tools involved in these processes. For example, if we take a financial organization like Citi group, they need to do a...

Words: 6349 - Pages: 26