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# 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

n

p

100
100
100
100

10
10
10
10

i
0.05
0.05
0.005
0.07

12
365

Q2 - Effective annual interest

a

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

b

A0

n

i

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

c

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

100

1

12

0.0157

d

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

100

1

12

0.0699

e

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

9534626 0.5 2.5 4.5 7.5 9.51 DFs 0.1 0.5920253 0.8667842 0.4043612 0.5 5.Real interest i f 0.1 0.5 6.5 8.1 0.6 179.4447973 0.Discount factors Year n i 0 1 2 3 4 5 6 7 8 9 10 11 0 0.12 0.2011 4 39.annuity 39.14)-4)/.21144= A= A*(1-(1.7879856 0.5382048 0.1 0.5 1970 2000 19.1 0.05 r 0.5 10.066666667 An A0 Number of periods Q10 .1 0.1586735 (£2000) (1+f)^n Compound rate of inflation = = Q8 .74005367 9.38 in 1986 Step 1 Step 2 Step 3 convert to £1986 UK inflation convert to \$2002 9.Oil price escalation Brent crude averaged \$14.5 1.1 1 0.1 0.4892771 0.14 2.21144= 39.1 0.21144 must be repaid in equal installments of 4 years .0766166 .1 0.1586735 0.9137123 *A 13.1 0.1 0.Brent capex 2 1 10.321423 Q9 .3676011 Q7 .7163506 0.6512278 0.5 3.547615 26.RPI RPI 1(£1970)= 9.457554 million Q6 .7823129 17.

20 1.70 79.03 326.67 367.04 3.54 5.00 121.11 248.55 1.49 497.44 5.39 134.70 2.01 6.89 140.85 1.92 7.00 103.RPI % change 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 RPI 13.46 1.80 133.13 71.20 465.40 148.00 0.36 1.57 Convert to Capex £1992 mod 52.30 141.10 1.45 18.80 59.830495 .80 94.98 Capex £1992 7 120 269 271 191 118 318 319 270 252 65 65 130 140 60 17.70 113.76 1.49 78.60 4.85 3.90 70.63 1.10 85.88 8.77 2.40 107.30 100.03 11.89 461.90 89.07 1.10 146.21 Capex (£1992) Capex (£2000) 3814.42 1.21 4676.16 4.57 451.88 311.44 2.30 1.79 9.40 4.04 1.00 59.70 1.07 3814.39 183.

042956042 0.048808848 0.9397 201.2400564 0.205550561 107.8894627 0.077500007 (1+i*n)^(1/n)-1 0.042956 0.047689553 0.04138 0.1884 Period PV 500 613.048809 0.895 2000 14 989.8895 181.044697508 0.7789657 TV 1326.An 150.045639553 0.046635 0.072183479 145.043804368 0.3618 An EAR 105 110 115 120 125 130 135 140 145 150 0.9132535 753.05 0.649 1628.05 120.041379744 162.04564 0.042148909 0.50625 1492.9657997 1215.0000 162.5550561 0.043804 0.2183479 0.046635139 0.044698 0.04769 0.05 0.042149 0.430793 .

59300853 .US CPI 23.