A Project has the following Cash flows

Determine:
1.
2.
3.
4.
5.

Payback period
Discounted payback period
Net present value
Profitability index
IRR

Discussion
What is the importance of each of the above?
discountinh rate
Project cash flows
Year (N)
0
1
2
3
4
5
6
NPV
PI
IRR

NPV

Cash flows (KES)

(13,000,000,000)
2,000,000,000
4,000,000,000
4,500,000,000
6,000,000,000
4,000,000,000
2,000,000,000
1,006,409,756.49

(13,000,000,000)
(11,000,000,000)
(7,000,000,000)
(2,500,000,000)
3,500,000,000
7,500,000,000
9,500,000,000

17.689%

12%
2,273,579,046.74

13%
1,832,813,133.11

15%
Discounted factors

Discounting CF
1
(13,000,000,000)
0.8695652174
1,739,130,435
0.7561436673
3,024,574,669
0.6575162324
2,958,823,046
0.5717532456
3,430,519,474
0.4971767353
1,988,706,941
0.4323275959
864,655,192
1,006,409,756

(13,000,000,000)
(11,260,869,565)
(8,236,294,896)
(5,277,471,850)
(1,846,952,377)
141,754,565
1,006,409,756
(38,473,424,367)

14,006,409,756
13,000,000,000
1.0774
15%
1,006,409,756.49

16%
618,832,225.48

14%
1,410,757,318.73

17%
247,145,499.68

NPV
2,500,000,000.00
2,000,000,000.00
1,500,000,000.00
NPV

1,000,000,000.00
500,000,000.00
12%
(500,000,000.00)
(1,000,000,000.00)

13%

14%

15%

16%

17%

18%

19%

20%

12%
(500,000,000.00)
(1,000,000,000.00)

13%

14%

15%

16%

17%

18%

19%

20%

18%
(109,474,905.47)

NPV

19%
(451,802,642.63)

20%
(780,564,128.94)

Compound interest for 100

11
36

12

-8

9
8

9
17

10
26

100

100

100

100

100

100

Value (000)

47

Cumm int for prev years

Inte

100000

8000
108,000
113,400.00
8%
116.64 125.9712 136.0489 146.9328
2
3
4
5
###
100
100
100
8
17
26
36
9
9
10
11

108
1
100
8

Value (000)
Cumm int for prev year
Interest for the year

ompound interest for 100 @ 8%

14

16

47

71

85

100

59

100

100

100

100

100

100

10

10
26

11
36

100

000)

12

13

15

Cumm int for prev years

Interest for the year

158.6874 171.3824 185.093021 199.9005 215.8924997273

6
7
8
9
10
100
100
100
###
100
47
59
71
85
100 115.8925
12
13
14
15
16
215.892500

100.00

Loan amortisation calculator

Interest rate
Amount
Time (Years)
Time (Months)
Monthly repayment

Loan
Interest rate
Period (Years)
Period (Months)
Monthly Repayments

5.5%
5,000,000
15
180
40,854

15,000,000
19%
15
180
$252,431.40
Principal
Interest
1
14,931.40 $237,500.00
2
15,167.82 $237,263.59
3
15,407.98 $237,023.43
4
15,651.94 $236,779.47
5
15,899.76 $236,531.65
6
16,151.50 $236,279.90
7
16,407.24 $236,024.17
8
16,667.02 $235,764.39
9
16,930.91 $235,500.49
10
17,198.98 $235,232.42
11
17,471.30 $234,960.10
12
17,747.93 $234,683.47
13
18,028.94 $234,402.47
14
18,314.40 $234,117.01
15
18,604.38 $233,827.03
16
18,898.94 $233,532.46
17
19,198.18 $233,233.23
18
19,502.15 $232,929.26
19
19,810.93 $232,620.47
20
20,124.61 $232,306.80
21
20,443.25 $231,988.16
22
20,766.93 $231,664.47
23
21,095.74 $231,335.66
24
21,429.76 $231,001.65
25
21,769.06 $230,662.34
26
22,113.74 $230,317.67
27
22,463.87 $229,967.53

28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72

22,819.55
23,180.86
23,547.89
23,920.73
24,299.48
24,684.22
25,075.05
25,472.07
25,875.38
26,285.07
26,701.25
27,124.02
27,553.49
27,989.75
28,432.92
28,883.11
29,340.43
29,804.98
30,276.90
30,756.28
31,243.25
31,737.94
32,240.46
32,750.93
33,269.49
33,796.25
34,331.36
34,874.94
35,427.13
35,988.06
36,557.87
37,136.70
37,724.70
38,322.01
38,928.77
39,545.14
40,171.27
40,807.32
41,453.44
42,109.78
42,776.52
43,453.82
44,141.83
44,840.75
45,550.72

$229,611.85
$229,250.55
$228,883.52
$228,510.67
$228,131.93
$227,747.19
$227,356.35
$226,959.33
$226,556.02
$226,146.33
$225,730.15
$225,307.38
$224,877.92
$224,441.65
$223,998.48
$223,548.29
$223,090.98
$222,626.42
$222,154.51
$221,675.12
$221,188.15
$220,693.47
$220,190.95
$219,680.47
$219,161.92
$218,635.15
$218,100.04
$217,556.46
$217,004.28
$216,443.35
$215,873.54
$215,294.70
$214,706.71
$214,109.40
$213,502.63
$212,886.26
$212,260.13
$211,624.08
$210,977.97
$210,321.62
$209,654.88
$208,977.59
$208,289.57
$207,590.66
$206,880.68

73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117

46,271.94
47,004.58
47,748.82
48,504.85
49,272.84
50,052.99
50,845.50
51,650.55
52,468.35
53,299.10
54,143.00
55,000.27
55,871.11
56,755.73
57,654.36
58,567.22
59,494.54
60,436.54
61,393.45
62,365.51
63,352.96
64,356.05
65,375.02
66,410.13
67,461.62
68,529.76
69,614.82
70,717.05
71,836.74
72,974.16
74,129.58
75,303.30
76,495.60
77,706.78
78,937.14
80,186.98
81,456.60
82,746.33
84,056.48
85,387.38
86,739.34
88,112.72
89,507.83
90,925.04
92,364.69

$206,159.46
$205,426.82
$204,682.58
$203,926.56
$203,158.57
$202,378.41
$201,585.91
$200,780.85
$199,963.05
$199,132.30
$198,288.40
$197,431.14
$196,560.30
$195,675.67
$194,777.04
$193,864.18
$192,936.87
$191,994.87
$191,037.96
$190,065.89
$189,078.44
$188,075.35
$187,056.38
$186,021.28
$184,969.78
$183,901.64
$182,816.59
$181,714.35
$180,594.66
$179,457.25
$178,301.82
$177,128.11
$175,935.80
$174,724.62
$173,494.27
$172,244.43
$170,974.80
$169,685.07
$168,374.92
$167,044.03
$165,692.06
$164,318.69
$162,923.57
$161,506.36
$160,066.72

118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162

93,827.13
95,312.73
96,821.84
98,354.86
99,912.14
101,494.08
103,101.07
104,733.51
106,391.79
108,076.32
109,787.53
111,525.84
113,291.66
115,085.45
116,907.63
118,758.67
120,639.02
122,549.13
124,489.49
126,460.58
128,462.87
130,496.87
132,563.07
134,661.98
136,794.13
138,960.04
141,160.24
143,395.27
145,665.70
147,972.07
150,314.96
152,694.95
155,112.62
157,568.57
160,063.41
162,597.74
165,172.21
167,787.43
170,444.07
173,142.77
175,884.19
178,669.03
181,497.95
184,371.67
187,290.89

$158,604.27
$157,118.68
$155,609.56
$154,076.55
$152,519.26
$150,937.32
$149,330.33
$147,697.90
$146,039.62
$144,355.08
$142,643.87
$140,905.57
$139,139.74
$137,345.96
$135,523.77
$133,672.73
$131,792.39
$129,882.27
$127,941.91
$125,970.83
$123,968.53
$121,934.54
$119,868.34
$117,769.42
$115,637.27
$113,471.37
$111,271.17
$109,036.13
$106,765.71
$104,459.33
$102,116.44
$99,736.45
$97,318.78
$94,862.83
$92,368.00
$89,833.66
$87,259.20
$84,643.97
$81,987.34
$79,288.64
$76,547.21
$73,762.38
$70,933.45
$68,059.73
$65,140.52

163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180

190,256.33
193,268.72
196,328.81
199,437.35
202,595.11
205,802.86
209,061.41
212,371.55
215,734.10
219,149.89
222,619.76
226,144.57
229,725.19
233,362.51
237,057.42
240,810.82
244,623.66
248,496.87

$62,175.08
$59,162.68
$56,102.60
$52,994.06
$49,836.30
$46,628.54
$43,370.00
$40,059.86
$36,697.31
$33,281.52
$29,811.65
$26,286.83
$22,706.21
$19,068.90
$15,373.99
$11,620.58
$7,807.74
$3,934.53

Total
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40

252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40

252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40

252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40

252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40
252,431.40

Develop an annuity table

Example
Demonstrate a case of annuity table using the loan calculator
Show:
1. All the 180 months
2. Principal amount repaid each month
3. Interest amount paid each month
4. Total monthly repayment
5. Total interest paid over the term of the loan
6. Total gross repayments

1 Given two investment opportunities to invest Ksh 100,000 as follows

Option 1
Buy on Jan 1 2016 Fixed income security with a coupon of 12% p.a payable
Option 2
Buy on Jan 1 2016 Fixed income security with a coupon of 12% p.a (3% ins
Which option is better and why? (Use EFFECT)
100,000
100,000
100,000
100,000
100,000

Use FVSCHEDULE to arrive at same result

12%
3%
3%
3%
3%

12,000
3,000
3,000
3,000
3,000
12,000

Option 2
Option 1
Difference

275.00
184.00
92.00
551

112,551
112,000
551

2 Determine the Future value of your house repayment and compare with the true value on maturity
Interest Pa
18%
Cost of house now
5,000,000
Monthly payment
52,661
Loan period
300
Future value
302,130,644
Total cash outflow
15,798,360
Possible value of house ???
302,130,644
1
0.00
2
3
4
5
6
7
8
9
10
11

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56

57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101

102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146

147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191

192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221
222
223
224
225
226
227
228
229
230
231
232
233
234
235
236

237
238
239
240
241
242
243
244
245
246
247
248
249
250
251
252
253
254
255
256
257
258
259
260
261
262
263
264
265
266
267
268
269
270
271
272
273
274
275
276
277
278
279
280
281

282
283
284
285
286
287
288
289
290
291
292
293
294
295
296
297
298
299
300

on of 12% p.a payable only once on 31-Dec-2016

on of 12% p.a (3% instalment payable Quarterly of 31-Mar, 30-Jun,30-Sep and 31-Dec 2016)

Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec

12,551
12.551%
12.551%
0.000%

31
28
30
31
30
30
31
31
30
31
30
31

275

184

92

360 Note Year is assumed to be 360

ue value on maturity if you are paying mortgage as follows

1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%

4,516,868
4,450,116
4,384,351
4,319,557
4,255,722
4,192,829
4,130,866
4,069,819
4,009,674
3,950,418
3,892,037

1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%

3,834,519
3,777,851
3,722,021
3,667,016
3,612,824
3,559,432
3,506,830
3,455,005
3,403,945
3,353,641
3,304,080
3,255,251
3,207,144
3,159,747
3,113,052
3,067,046
3,021,720
2,977,064
2,933,068
2,889,722
2,847,017
2,804,943
2,763,491
2,722,651
2,682,415
2,642,773
2,603,717
2,565,239
2,527,329
2,489,979
2,453,181
2,416,927
2,381,209
2,346,019
2,311,349
2,277,191
2,243,538
2,210,382
2,177,716
2,145,533
2,113,826
2,082,587
2,051,810
2,021,488
1,991,613

1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%

1,962,181
1,933,183
1,904,614
1,876,467
1,848,736
1,821,415
1,794,497
1,767,977
1,741,850
1,716,108
1,690,747
1,665,760
1,641,143
1,616,890
1,592,995
1,569,453
1,546,259
1,523,408
1,500,895
1,478,714
1,456,861
1,435,331
1,414,119
1,393,221
1,372,632
1,352,346
1,332,361
1,312,671
1,293,272
1,274,159
1,255,330
1,236,778
1,218,500
1,200,493
1,182,752
1,165,273
1,148,052
1,131,086
1,114,370
1,097,901
1,081,676
1,065,691
1,049,942
1,034,425
1,019,138

1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%

1,004,077
989,239
974,619
960,216
946,026
932,045
918,271
904,700
891,331
878,158
865,180
852,395
839,798
827,387
815,159
803,113
791,244
779,551
768,030
756,680
745,498
734,480
723,626
712,932
702,396
692,016
681,789
671,713
661,787
652,006
642,371
632,878
623,525
614,310
605,232
596,287
587,475
578,793
570,240
561,813
553,510
545,330
537,271
529,331
521,508

1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%

513,801
506,208
498,727
491,357
484,096
476,941
469,893
462,949
456,107
449,367
442,726
436,183
429,737
423,386
417,129
410,965
404,891
398,908
393,013
387,205
381,482
375,845
370,290
364,818
359,427
354,115
348,882
343,726
338,646
333,641
328,711
323,853
319,067
314,352
309,706
305,129
300,620
296,177
291,800
287,488
283,239
279,054
274,930
270,867
266,864

1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%

262,920
259,034
255,206
251,435
247,719
244,058
240,451
236,898
233,397
229,948
226,549
223,201
219,903
216,653
213,451
210,297
207,189
204,127
201,110
198,138
195,210
192,325
189,483
186,683
183,924
181,206
178,528
175,890
173,290
170,729
168,206
165,720
163,271
160,858
158,481
156,139
153,832
151,558
149,319
147,112
144,938
142,796
140,686
138,606
136,558

1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%

134,540
132,552
130,593
128,663
126,761
124,888
123,043
121,224
119,433
117,668
115,929
114,215
112,528
110,865
109,226
107,612
106,022
104,455
102,911
101,390
99,892
98,416
96,961
95,528
94,117
92,726
91,355
90,005
88,675
87,365
86,074
84,802
83,548
82,314
81,097
79,899
78,718
77,555
76,409
75,279
74,167
73,071
71,991
70,927
69,879

1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%
1.50%

68,846
67,829
66,826
65,839
64,866
63,907
62,963
62,032
61,115
60,212
59,322
58,446
57,582
56,731
55,893
55,067
54,253
53,451
52,661
302,130,644

Dec 2016)

ote Year is assumed to be 360 days

1 Given two investment opportunities to invest Ksh 100,000 as follows

Option 1
Buy on Jan 1 2016 Fixed income security with a coupon of 12% p.a payable only on
Option 2
Buy on Jan 1 2016 Fixed income security with a coupon of 12% p.a (3% instalment
Which option is better and why?
2 Determine the Future value of your house repayment and compare with the true value on maturity
Interest Pa
18%
Cost of house n
5,000,000
Monthly paymen
52,661
Loan period
300

INVESTMENT

100000
12%
12000

3%
3000
103000

3090
106090

3182.7
109272.7

% p.a payable only once on 31-Dec-2016

% p.a (3% instalment payable Quarterly of 31-Mar, 30-Jun,30-Sep and 31-Dec 2016)

ue value on maturity if you are paying mortgage as follows