EFFECT OF COMPOUNDING FREQUENCY MODEL 1: EFFECT OF CO

Nominal annual interest rate (APR) 8.00%

Number of compounding periods per year 2
Amount of initial investment $ 100,000
Length of investment period (years) 10

Effective interest rate 8.16%

Future value of investment (using formula) $ 219,112.31
Future value of investment (using function) $ 219,112.31

Effective Future
Int.rate Value
Compoinding period 8.16% $ 219,112.31
Annual 1
Semi-annual 2
Quarterly 4
Monthly 12
Bi-weekly 26
Weekly 52
Daily 365
DEL 1: EFFECT OF COMPOUNDING FREQUENCY-ХУУДАС:200
Present and Future Values for Constant Annuities MODEL 2:

Annual saving (A) $ 1,000

Number of years (n, <=20) 10
Interst rate (rr, % per year) 8%

Computetations using
Table Formulas Fanctions
Annuity in arrears
Perent value $ 6,710.08 $ 6,710.08 $ 6,710.08
Future value $ 14,486.56 $ 14,486.56 $ 14,486.56

Annuity in advance
Peaent value $ 7,246.89 $ 7,246.89 $ 7,246.89
Future value $ 15,645.49 $ 15,645.49 $ 15,645.49

Table for annuity in arrears

Time Cash flow PV FV
0
1 $ 1,000.00 $ 925.93 $ 1,999.00
2 $ 1,000.00 $ 857.34 $ 1,850.93
3 $ 1,000.00 $ 793.83 $ 1,713.82
4 $ 1,000.00 $ 735.03 $ 1,586.87
5 $ 1,000.00 $ 680.58 $ 1,469.33
6 $ 1,000.00 $ 630.17 $ 1,360.49
7 $ 1,000.00 $ 583.49 $ 1,259.71
8 $ 1,000.00 $ 540.27 $ 1,166.40
9 $ 1,000.00 $ 500.25 $ 1,080.00
10 $ 1,000.00 $ 463.19 $ 1,000.00
11 $ - $ - $ -
12 $ - $ - $ -
13 $ - $ - $ -
14 $ - $ - $ -
15 $ - $ - $ -
16 $ - $ - $ -
17 $ - $ - $ -
18 $ - $ - $ -
19 $ - $ - $ -
20 $ - $ - $ -
 MODEL 2: CONSTANT ANNUITIES-ХУУДАС:202

Table for annuity in advance

Cash flow PV FV
$ 1,000.00 $ 1,000.00 $ 2,158.92
$ 1,000.00 $ 925.93 $ 1,999.00
$ 1,000.00 $ 857.34 $ 1,850.93
$ 1,000.00 $ 793.83 $ 1,713.82
$ 1,000.00 $ 735.03 $ 1,586.87
$ 1,000.00 $ 680.58 $ 1,469.33
$ 1,000.00 $ 630.17 $ 1,360.49
$ 1,000.00 $ 583.49 $ 1,259.71
$ 1,000.00 $ 540.27 $ 1,166.40
$ 1,000.00 $ 500.25 $ 1,080.00
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
Present and Future Values for Growing Annuities MODEL 3

Annual saving (A) $ 1,000

Number of years (n, <=20) 10
Interst rate (rr, % per year) 8.00%
Growth rate (g, % per year) 4.00%

Adjustted interest rate (k, % per year) 3.85%

Computetations using
Table Formulas Fanctions
Annuity in arrears
Perent value $ 8,173.37 $ 8,173.37 $ 8,173.37
Future value $ 17,645.70 $ 17,645.70 $ 17,645.70

Annuity in advance
Peaent value $ 8,487.73 $ 8,487.73 $ 8,487.73
Future value $ 18,324.38 $ 18,324.38 $ 18,324.38

Table for annuity in arrears Table for annuity in adva

Time Cash flow PV FV
0
1 1040 $ 962.96 $ 2,078.96
2 1081.6 $ 927.30 $ 2,001.97
3 1124.864 $ 892.95 $ 1,927.82
4 1169.85856 $ 859.88 $ 1,856.42
5 1216.652902 $ 828.03 $ 1,787.66
6 1265.319018 $ 797.37 $ 1,721.45
7 1315.931779 $ 767.83 $ 1,657.70
8 1368.56905 $ 739.40 $ 1,596.30
9 1423.311812 $ 712.01 $ 1,537.18
10 1480.244285 $ 685.64 $ 1,480.24
11 0 $ - $ -
12 0 $ - $ -
13 0 $ - $ -
14 0 $ - $ -
15 0 $ - $ -
16 0 $ - $ -
17 0 $ - $ -
18 0 $ - $ -
19 0 $ - $ -
20 0 $ - $ -
 MODEL 3: GROWING ANNUITIES-ХУУДАС:205

Table for annuity in advance

Cash flow PV FV
$ 1,000.00 $ 1,000.00 $ 2,158.92
$ 1,040.00 $ 962.96 $ 2,078.96
$ 1,081.60 $ 927.30 $ 2,001.97
$ 1,124.86 $ 892.95 $ 1,927.82
$ 1,169.86 $ 859.88 $ 1,856.42
$ 1,216.65 $ 828.03 $ 1,787.66
$ 1,265.32 $ 797.37 $ 1,721.45
$ 1,315.93 $ 767.83 $ 1,657.70
$ 1,368.57 $ 739.40 $ 1,596.30
$ 1,423.31 $ 712.01 $ 1,537.18
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
Loan Amortization Table Using PMT Function MODEL 4: LOAN AMO

Input Data
Interest rate (rr, % per year) 10%
Loan life (n, years) 15
Initial loan balance (P, S) $ 100,000.00
Required annual payment (Apmt, $) $ 13,147.38
Year Year-beg Annual
Balance Payment

1 $ 100,000.00 $ 13,147.38
2 $ 96,852.62 $ 13,147.38
3 $ 93,390.51 $ 13,147.38
4 $ 89,582.18 $ 13,147.38
5 $ 85,393.02 $ 13,147.38
6 $ 80,784.94 $ 13,147.38
7 $ 75,716.06 $ 13,147.38
8 $ 70,140.29 $ 13,147.38
9 $ 64,006.94 $ 13,147.38
10 $ 57,260.26 $ 13,147.38
11 $ 49,838.91 $ 13,147.38
12 $ 41,675.42 $ 13,147.38
13 $ 32,695.58 $ 13,147.38
14 $ 22,817.76 $ 13,147.38
15 $ 11,952.16 $ 13,147.38
16 $ - $ -
17 $ - $ -
18 $ - $ -
19 $ - $ -
20 $ - $ -
21 $ - $ -
22 $ - $ -
23 $ - $ -
24 $ - $ -
25 $ - $ -
26 $ - $ -
27 $ - $ -
28 $ - $ -
29 $ - $ -
30 $ - $ -
MODEL 4: LOAN AMORTIZATION TABLE, VERSION 1-ХУУДАС:208

Interest Principal Year-end

Componemt Repiad Balance

$ 10,000.00 $ 3,147.38 $ 96,852.62

$ 9,685.26 $ 3,462.12 $ 93,390.51
$ 9,339.05 $ 3,808.33 $ 89,582.18
$ 8,958.22 $ 4,189.16 $ 85,393.02
$ 8,539.30 $ 4,608.08 $ 80,784.94
$ 8,078.49 $ 5,068.88 $ 75,716.06
$ 7,571.61 $ 5,575.77 $ 70,140.29
$ 7,014.03 $ 6,133.35 $ 64,006.94
$ 6,400.69 $ 6,746.68 $ 57,260.26
$ 5,726.03 $ 7,421.35 $ 49,838.91
$ 4,983.89 $ 8,163.49 $ 41,675.42
$ 4,167.54 $ 8,979.84 $ 32,695.58
$ 3,269.56 $ 9,877.82 $ 22,817.76
$ 2,281.78 $ 10,865.60 $ 11,952.16
$ 1,195.22 $ 11,952.16 $ 0.00
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
$ - $ - $ -
Calculating Nominal and Real Total Returns MO

Nominal
Final portfolio value $ 2,155.16
Cumulative return: 1990-95 115.52%
Annualized return: 1990-95 13.65%

Large Cap Divishare CPI Shares held Shares bought Portfolio value
Price Annual with dividend Nominal $
Mo-beg Mo-end Mo-beg Mo-beg Mo-end Mo-beg

1990.01 339.97 11.14 127.4 2.9414 0.0083 $ 1,000.00

1990.02 330.45 11.23 128 2.9497 0.0082 $ 974.73
1990.03 338.46 11.32 128.7 2.9579 0.0083 $ 1,001.12
1990.04 338.18 11.44 128.9 2.9661 0.0081 $ 1,003.08
1990.05 350.25 11.55 129.2 2.9742 0.0079 $ 1,041.71
1995.08 559.11 13.51 152.9 3.4744 0.0068 $ 1,942.57
1995.09 578.77 13.58 153.2 3.4812 0.0068 $ 2,014.79
1995.10 582.92 13.65 153.7 3.4879 0.0067 $ 2,033.18
1995.11 595.53 13.72 153.6 3.4946 0.0065 $ 2,081.13
1995.12 614.57 13.79 153.5 3.5011 0.0065 $ 2,151.66
1996.01 614.42 13.89 154.4 3.5076 $ 2,155.16
 MODEL 1: CALCULATING TOTAL RETURNS-ХУУДАС:252

Real
$ 1,778.28
77.83%
10.07%

Portfolio value
Constant $
Mo-beg

$ 1,000.00
$ 970.16
$ 991.00
$ 991.40
$ 1,027.19
$ 1,618.60
$ 1,675.48
$ 1,685.27
$ 1,726.14
$ 1,785.81
$ 1,778.28
 MODEL 2:

Growth of $1
Sma ll cap
$25.00
Large Cap
$20.00
Bonds
$15.00
Value

$10.00

$5.00

$-
1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Average annualized returnSmall cap Large cap

9.00% 13.14%

Total Annual Percentage Return Value at beginning of year

Year Small cap Large cap Small cap Large Cap
Bonds
Stocks Stocks
1982 27.4% 22.1% 6.5% $ 1.00 $ 1.00
1983 34.5% 22.4% -0.5% $ 1.27 $ 1.22
1984 -14.0% 6.5% 15.3% $ 1.71 $ 1.49
1985 28.2% 32.0% 32.7% $ 1.47 $ 1.59
1986 3.4% 18.4% 24.0% $ 1.89 $ 2.10
1987 -14.0% 5.3% -2.7% $ 1.95 $ 2.49
1988 21.7% 16.9% 8.4% $ 1.68 $ 2.62
1989 8.4% 31.3% 19.5% $ 2.04 $ 3.06
1990 -27.1% -3.2% 7.1% $ 2.22 $ 4.02
1991 50.2% 30.7% 18.4% $ 1.62 $ 3.89
1992 27.8% 7.7% 7.8% $ 2.43 $ 5.09
1993 20.3% 9.9% 15.5% $ 3.10 $ 5.48
1994 -3.3% 1.3% -7.2% $ 3.73 $ 6.02
1995 33.2% 37.7% 31.7% $ 3.61 $ 6.10
1996 16.5% 23.1% -0.8% $ 4.81 $ 8.40
1997 22.4% 33.2% 15.1% $ 5.60 $ 10.34
1998 -2.6% 28.6% 13.5% $ 6.85 $ 13.77
1999 21.3% 21.0% -8.7% $ 6.67 $ 17.71
2000 -2.7% -9.1% 16.6% $ 8.10 $ 21.43
2001 -3.1% -11.9% 8.2% $ 7.88 $ 19.48
2002 -20.0% -22.1% 14.4% $ 7.63 $ 17.16
2003 $ 6.11 $ 13.37
 MODEL 2: COMPARING RETURNS ON SEVERAL ASSETS-ХУУДАС:255

9 2000 2001 2002 2003

Bonds
10.63%

beginning of year
Bonds

$ 1.00
$ 1.07
$ 1.06
$ 1.22
$ 1.62
$ 2.01
$ 1.96
$ 2.12
$ 2.53
$ 2.71
$ 3.21
$ 3.46
$ 4.00
$ 3.71
$ 4.89
$ 4.85
$ 5.58
$ 6.34
$ 5.79
$ 6.75
$ 7.30
$ 8.35
 MODEL 3: COMPARING NO

Growth of $1 in Nominal and Real Dollars

40
35 Real
30 Nomi na
l
25
20
Value

15
10
5
0
82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03
1 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20
9

Nominal Real
Average annual return 13.14% 9.67%

Value at beginning of the year

Year Annual CPI Nominal Real
Return (Year-end)
1981 94
1982 22.1% 97.6 $ 1.00 $ 1.00
1983 22.4% 101.3 $ 1.22 $ 1.18
1984 6.5% 105.3 $ 1.49 $ 1.39
1985 32.0% 109.3 $ 1.59 $ 1.42
1986 18.4% 110.5 $ 2.10 $ 1.81
1987 5.3% 115.4 $ 2.49 $ 2.12
1988 16.9% 120.5 $ 2.62 $ 2.13
1989 31.3% 126.1 $ 3.06 $ 2.39
1990 -3.2% 133.8 $ 4.02 $ 3.00
1991 30.7% 137.9 $ 3.89 $ 2.73
1992 7.7% 141.9 $ 5.09 $ 3.47
1993 9.9% 145.8 $ 5.48 $ 3.63
1994 1.3% 149.7 $ 6.02 $ 3.88
1995 37.7% 153.5 $ 6.10 $ 3.83
1996 23.1% 158.6 $ 8.40 $ 5.14
1997 33.2% 161.3 $ 10.34 $ 6.13
1998 28.6% 163.9 $ 13.77 $ 8.02
1999 21.0% 168.3 $ 17.71 $ 10.16
2000 -9.1% 174 $ 21.43 $ 11.97
2001 -11.9% 176.7 $ 19.48 $ 10.52
2002 -22.1% 180.9 $ 17.16 $ 9.13
2003 $ 13.37 $ 6.95
DEL 3: COMPARING NOMINAL AND REAL GROWTH OF INVESTMENT-ХУУДАС:258
Rolling Period Nominal and Real Returns M

15 years 15 years
Cumulative return Annualized return
Maximum 1246.3% 742.3% 18.9%
Minimum 88.8% -8.1% 4.3%
Mean 519.9% 262.8% 12.0%
Median 507.0% 225.6% 12.8%
S.deviation 313.2% 228.9% 4.1%
Data
Large cap CPI Window returns Window returns
Stocks Year-end (1+Ret) Nominal Real Nominal
1945 18.2
1946 -9.3% 21.5 0.91 601.1% 328.2% 13.9%
1947 4.9% 23.4 1.05 886.4% 606.9% 16.5%
1948 5.3% 24.1 1.05 757.6% 560.1% 15.4%
1949 18.2% 23.6 1.18 898.5% 678.7% 16.6%
1950 32.7% 25.0 1.33 885.8% 645.7% 16.5%
1951 23.5% 26.5 1.24 735.7% 557.0% 15.2%
1952 18.9% 26.7 1.19 507.0% 388.9% 12.8%
1953 -1.7% 26.9 0.98 533.6% 399.0% 13.1%
1954 52.6% 26.7 1.53 615.4% 442.1% 14.0%
1955 31.4% 26.8 1.31 329.9% 204.5% 10.2%
1956 6.5% 27.6 1.07 240.6% 129.3% 8.5%
1957 -11.1% 28.4 0.89 265.2% 145.2% 9.0%
1958 43.8% 28.9 1.44 389.3% 226.9% 11.2%
1959 13.0% 29.4 1.13 189.9% 81.3% 7.4%
1960 0.2% 29.8 1.00 88.8% 7.0% 4.3%
1961 27.6% 30.0 1.28 158.7% 38.9% 6.5%
1962 -8.8% 30.4 0.91 151.4% 29.6% 6.3%
1963 22.6% 30.9 1.23 155.6% 25.1% 6.5%
1964 16.7% 31.2 1.17 122.0% 1.3% 5.5%
1965 12.5% 31.8 1.13 126.0% -8.1% 5.6%
1966 -10.3% 32.9 0.90 166.2% -1.9% 6.7%
1967 24.1% 33.9 1.24 181.9% -1.3% 7.2%
1968 11.0% 35.5 1.11 177.4% -3.7% 7.0%
1969 -8.3% 37.7 0.92 205.8% 7.2% 7.7%
1970 4.1% 39.8 1.04 255.2% 27.2% 8.8%
1971 14.2% 41.1 1.14 350.4% 64.0% 10.6%
1972 19.1% 42.5 1.19 367.0% 73.7% 10.8%
1973 -14.8% 46.2 0.85 312.9% 52.0% 9.9%
1974 -26.4% 51.9 0.74 466.5% 117.2% 12.3%
1975 37.3% 55.5 1.37 910.5% 315.9% 16.7%
1976 24.0% 58.2 1.24 612.5% 195.5% 14.0%
1977 -7.3% 62.1 0.93 651.0% 216.9% 14.4%
1978 6.5% 67.7 1.07 772.5% 281.8% 15.5%
1979 18.8% 76.7 1.19 800.3% 318.1% 15.8%
1980 32.5% 86.3 1.33 667.7% 293.3% 14.6%
1981 -5.0% 94.0 0.95 697.8% 348.6% 14.8%
1982 22.1% 97.6 1.22 933.8% 512.7% 16.9%
1983 22.4% 101.3 1.22 1027.8% 582.4% 17.5%
1984 6.5% 105.3 1.07 1084.9% 632.4% 17.9%
1985 32.0% 109.3 1.32 1246.3% 742.3% 18.9%
1986 18.4% 110.5 1.18 827.1% 482.4% 16.0%
1987 5.3% 115.4 1.05 589.8% 331.4% 13.7%
1988 16.9% 120.5 1.17 410.3% 225.6% 11.5%
1989 31.3% 126.1 1.31
1990 -3.2% 133.8 0.97
1991 30.7% 137.9 1.31
1992 7.7% 141.9 1.08
1993 9.9% 145.8 1.10
1994 1.3% 149.7 1.01
1995 37.7% 153.5 1.38
1996 23.1% 158.6 1.23
1997 33.2% 161.3 1.33
1998 28.6% 163.9 1.29
1999 21.0% 168.3 1.21
2000 -9.1% 174.0 0.91
2001 -11.9% 176.7 0.88
2002 -22.1% 180.9 0.78
 MODEL 4: COMPARING ROLLING PERIOD RETURNS-ХУУДАС:261

14

12 Nomi nal
15 years
Annualized return 10 Rea l
15.3%
8
-0.6% Return
7.4% 6

8.2% 4

5.1% 2

0
Window returns 5 7 9 1 3 5 7 9 1 3 5 7 9 1 3 5 7 9 1 3 5 7
94 194 194 195 195 195 195 195 196 196 196 196 196 197 197 197 197 197 198 198 198 198
Real -21

10.2%
13.9%
13.4%
14.7%
14.3%
13.4%
11.2%
0.25
11.3%
11.9% 0.2 Nomi nal
7.7%
Real
5.7% 0.15
Return

6.2%
0.1
8.2%
4.0% 0.05
0.4%
2.2% 0
1.7% 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87
19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19
-0.05
1.5%
0.1%
-0.6%
-0.1%
-0.1%
-0.2%
0.5%
1.6%
3.4%
3.7%
2.8%
5.3%
10.0%
 7.5%
8.0%
9.3%
10.0%
9.6%
10.5%
12.8%
13.7%
14.2%
15.3%
12.5%
10.2%
8.2%
75 977 979 981 983 985 987
1 1 1 1 1 1

5 7 9 1 3 5 7
97 197 197 198 198 198 198