Q1 - Terminal values

a
b
c
d

Formula
A0*(1+(i*n))
A0*((1+i)^n)
A0*((1+i)^n*p)
A0*((1+(j/p)^n*p)

A0

100
100
100
100

10
10
10
10

i
0.05
0.05
0.005
0.07

12
365

Q2 - Effective annual interest

Formula
A0*(1+(i*n))

A0

100
100
100
100
100
100
100
100
100
100

1
2
3
4
5
6
7
8
9
10

0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05

A0*((1+i)^n)

100

10

0.05

A0*((1+i)^n*p)

100

12

0.0157

A0*((1+(j/p)^n*p)

100

12

0.0699

A0*(1+y1)*(1+yn)

100

5
4
3
2
1

0.11
0.09
0.076
0.061
0.0515

Q3 - Investment decision
CF
a

1
2
3

Time
500
1000
2000

i
0
10
20

Discount
0.05
0.05
0.05

1
0.613913254
0.376889483

Q4 - Annuity
Assumption of discount rate of 5%
A

n
1000

i
10

PV of A
0.08

6710.081399

Q5 - Debt repayment
CF
2004
2005
2006
2007
2008
2009
2010

i
10
10
10
0

n
0.14
0.14
0.14
0.14

Compound
3
2
1
0
1
2
3

14.81544
12.996
11.4
39.21144

2011

39.21144 must be repaid in equal installments of 4 years - annuity

39.21144=
39.21144=
A=

A*(1-(1.14)-4)/.14
2.9137123 *A
13.457554 million

Q6 - Discount factors
Year

0
1
2
3
4
5
6
7
8
9
10
11

0
0.5
1.5
2.5
3.5
4.5
5.5
6.5
7.5
8.5
9.5
10.5

1970
2000

19.6
179.51

DFs
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1

1
0.9534626
0.8667842
0.7879856
0.7163506
0.6512278
0.5920253
0.5382048
0.4892771
0.4447973
0.4043612
0.3676011

Q7 - RPI
RPI

1(1970)=

9.1586735 (2000)

(1+f)^n
Compound rate of inflation

=
=

Q8 - Oil price escalation

Brent crude averaged $14.38 in 1986
Step 1
Step 2
Step 3

convert to 1986
UK inflation
convert to $2002

9.7823129
17.547615
26.321423

Q9 - Real interest
i
f

0.12
0.05

0.066666667

An
A0
Number of periods
Q10 - Brent capex

2
1
10.74005367

9.1586735
0.0766166

RPI
% change
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993

RPI

13.45
18.03
11.88
8.60
4.54
5.01
6.04
3.40
4.16
4.92
7.79
9.44
5.85
3.76
1.57

Convert to
Capex
1992 mod
52.80
59.90
70.70
79.10
85.90
89.80
94.30
100.00
103.40
107.70
113.00
121.80
133.30
141.10
146.40
148.70

2.77
2.44
2.07
1.85
1.70
1.63
1.55
1.46
1.42
1.36
1.30
1.20
1.10
1.04
1.00
0.98

Capex
1992

7
120
269
271
191
118
318
319
270
252
65
65
130
140
60

17.11
248.49
497.89
461.88
311.39
183.20
465.57
451.67
367.03
326.49
78.13
71.39
134.89
140.00
59.07
3814.21

Capex (1992)
Capex (2000)

3814.21
4676.830495

An
150.0000
162.8895
181.9397
201.3618

An

EAR
105
110
115
120
125
130
135
140
145
150

0.05
0.048808848
0.047689553
0.046635139
0.045639553
0.044697508
0.043804368
0.042956042
0.042148909
0.041379744

162.8894627

0.05

120.5550561

0.205550561

107.2183479

0.072183479

145.2400564

0.077500007

(1+i*n)^(1/n)-1
0.05
0.048809
0.04769
0.046635
0.04564
0.044698
0.043804
0.042956
0.042149
0.04138

0.1884

Period
PV
500
613.9132535
753.7789657

TV
1326.649
1628.895
2000

14
989.9657997
1215.50625
1492.430793

US CPI
23.59300853