Case S

Case Study -->

Task:

Saldi, the company we are looking at, has an outstanding loan of $120,000,000 as of the end of 2015. The co
debt in the next 10 years, making constant monthly payments at 4% interest rate. Calculate the outstanding l
000 as of the end of 2015. The company agrees with its bank managers that it will repay its entire
t rate. Calculate the outstanding loan that Saldi will have at the end of year 5.
Task:

Calculate the Present Value of the two scenarios below. Use a 9% interest rate for the calculation.

Scenario 1:
rate for the calculation.

Scenario 2:
Solutions -->
Task 1 - Solution

Number of periods 120 Period Payment

Interest rate (annual) 4% 1 $1,214,942
Interest rate (monthly) 0.33% 2 $1,214,942
Outstanding loan at 31.12.15 $120,000,000 3 $1,214,942
4 $1,214,942
Monthly Payment $1,214,942 5 $1,214,942
6 $1,214,942
7 $1,214,942
Outstanding loan at 31/12/2020 $65,970,201 8 $1,214,942
9 $1,214,942
10 $1,214,942
11 $1,214,942
12 $1,214,942
13 $1,214,942
14 $1,214,942
15 $1,214,942
16 $1,214,942
17 $1,214,942
18 $1,214,942
19 $1,214,942
20 $1,214,942
21 $1,214,942
22 $1,214,942
23 $1,214,942
24 $1,214,942
25 $1,214,942
26 $1,214,942
27 $1,214,942
28 $1,214,942
29 $1,214,942
30 $1,214,942
31 $1,214,942
32 $1,214,942
33 $1,214,942
34 $1,214,942
35 $1,214,942
36 $1,214,942
37 $1,214,942
38 $1,214,942
39 $1,214,942
40 $1,214,942
41 $1,214,942
42 $1,214,942
43 $1,214,942
44 $1,214,942
45 $1,214,942
46 $1,214,942
47 $1,214,942
48 $1,214,942
49 $1,214,942
50 $1,214,942
51 $1,214,942
52 $1,214,942
53 $1,214,942
54 $1,214,942
55 $1,214,942
56 $1,214,942
57 $1,214,942
58 $1,214,942
59 $1,214,942
60 $1,214,942
61 $1,214,942
62 $1,214,942
63 $1,214,942
64 $1,214,942
65 $1,214,942
66 $1,214,942
67 $1,214,942
68 $1,214,942
69 $1,214,942
70 $1,214,942
71 $1,214,942
72 $1,214,942
73 $1,214,942
74 $1,214,942
75 $1,214,942
76 $1,214,942
77 $1,214,942
78 $1,214,942
79 $1,214,942
80 $1,214,942
81 $1,214,942
82 $1,214,942
83 $1,214,942
84 $1,214,942
85 $1,214,942
86 $1,214,942
87 $1,214,942
88 $1,214,942
89 $1,214,942
90 $1,214,942
91 $1,214,942
92 $1,214,942
93 $1,214,942
94 $1,214,942
95 $1,214,942
96 $1,214,942
97 $1,214,942
98 $1,214,942
99 $1,214,942
100 $1,214,942
101 $1,214,942
102 $1,214,942
103 $1,214,942
104 $1,214,942
105 $1,214,942
106 $1,214,942
107 $1,214,942
108 $1,214,942
109 $1,214,942
110 $1,214,942
111 $1,214,942
112 $1,214,942
113 $1,214,942
114 $1,214,942
115 $1,214,942
116 $1,214,942
117 $1,214,942
118 $1,214,942
119 $1,214,942
120 $1,214,942
Interest Principal Residual Debt
$400,000 $814,942 $119,185,058
$397,284 $817,658 $118,367,400
$394,558 $820,384 $117,547,017
$391,823 $823,118 $116,723,898
$389,080 $825,862 $115,898,036
$386,327 $828,615 $115,069,421
$383,565 $831,377 $114,238,044
$380,793 $834,148 $113,403,896
$378,013 $836,929 $112,566,968
$375,223 $839,718 $111,727,249
$372,424 $842,517 $110,884,732
$369,616 $845,326 $110,039,406
$366,798 $848,144 $109,191,262
$363,971 $850,971 $108,340,291
$361,134 $853,807 $107,486,484
$358,288 $856,653 $106,629,831
$355,433 $859,509 $105,770,322
$352,568 $862,374 $104,907,948
$349,693 $865,248 $104,042,699
$346,809 $868,133 $103,174,567
$343,915 $871,026 $102,303,540
$341,012 $873,930 $101,429,610
$338,099 $876,843 $100,552,767
$335,176 $879,766 $99,673,002
$332,243 $882,698 $98,790,303
$329,301 $885,641 $97,904,663
$326,349 $888,593 $97,016,070
$323,387 $891,555 $96,124,515
$320,415 $894,527 $95,229,989
$317,433 $897,508 $94,332,480
$314,442 $900,500 $93,431,980
$311,440 $903,502 $92,528,478
$308,428 $906,513 $91,621,965
$305,407 $909,535 $90,712,430
$302,375 $912,567 $89,799,863
$299,333 $915,609 $88,884,254
$296,281 $918,661 $87,965,593
$293,219 $921,723 $87,043,870
$290,146 $924,795 $86,119,075
$287,064 $927,878 $85,191,197
$283,971 $930,971 $84,260,226
$280,867 $934,074 $83,326,152
$277,754 $937,188 $82,388,964
$274,630 $940,312 $81,448,652
$271,496 $943,446 $80,505,206
$268,351 $946,591 $79,558,615
$265,195 $949,746 $78,608,869
$262,030 $952,912 $77,655,957
$258,853 $956,088 $76,699,868
$255,666 $959,275 $75,740,593
$252,469 $962,473 $74,778,120
$249,260 $965,681 $73,812,438
$246,041 $968,900 $72,843,538
$242,812 $972,130 $71,871,408
$239,571 $975,370 $70,896,038
$236,320 $978,622 $69,917,417
$233,058 $981,884 $68,935,533
$229,785 $985,157 $67,950,376
$226,501 $988,440 $66,961,936
$223,206 $991,735 $65,970,201
$219,901 $995,041 $64,975,160
$216,584 $998,358 $63,976,802
$213,256 $1,001,686 $62,975,116
$209,917 $1,005,025 $61,970,092
$206,567 $1,008,375 $60,961,717
$203,206 $1,011,736 $59,949,981
$199,833 $1,015,108 $58,934,873
$196,450 $1,018,492 $57,916,381
$193,055 $1,021,887 $56,894,494
$189,648 $1,025,293 $55,869,200
$186,231 $1,028,711 $54,840,489
$182,802 $1,032,140 $53,808,349
$179,361 $1,035,580 $52,772,769
$175,909 $1,039,032 $51,733,736
$172,446 $1,042,496 $50,691,240
$168,971 $1,045,971 $49,645,270
$165,484 $1,049,457 $48,595,812
$161,986 $1,052,956 $47,542,857
$158,476 $1,056,465 $46,486,391
$154,955 $1,059,987 $45,426,404
$151,421 $1,063,520 $44,362,884
$147,876 $1,067,065 $43,295,818
$144,319 $1,070,622 $42,225,196
$140,751 $1,074,191 $41,151,005
$137,170 $1,077,772 $40,073,233
$133,577 $1,081,364 $38,991,869
$129,973 $1,084,969 $37,906,900
$126,356 $1,088,585 $36,818,315
$122,728 $1,092,214 $35,726,101
$119,087 $1,095,855 $34,630,247
$115,434 $1,099,508 $33,530,739
$111,769 $1,103,173 $32,427,567
$108,092 $1,106,850 $31,320,717
$104,402 $1,110,539 $30,210,178
$100,701 $1,114,241 $29,095,936
$96,986 $1,117,955 $27,977,981
$93,260 $1,121,682 $26,856,300
$89,521 $1,125,421 $25,730,879
$85,770 $1,129,172 $24,601,707
$82,006 $1,132,936 $23,468,771
$78,229 $1,136,712 $22,332,058
$74,440 $1,140,501 $21,191,557
$70,639 $1,144,303 $20,047,254
$66,824 $1,148,117 $18,899,136
$62,997 $1,151,945 $17,747,192
$59,157 $1,155,784 $16,591,407
$55,305 $1,159,637 $15,431,770
$51,439 $1,163,502 $14,268,268
$47,561 $1,167,381 $13,100,887
$43,670 $1,171,272 $11,929,615
$39,765 $1,175,176 $10,754,439
$35,848 $1,179,094 $9,575,345
$31,918 $1,183,024 $8,392,322
$27,974 $1,186,967 $7,205,354
$24,018 $1,190,924 $6,014,431
$20,048 $1,194,894 $4,819,537
$16,065 $1,198,877 $3,620,660
$12,069 $1,202,873 $2,417,788
$8,059 $1,206,882 $1,210,905
$4,036 $1,210,905 $0
Task 2 - Solution

Scenario 1:

31Dec 31Dec 31Dec 31Dec

2016 2017 2018 2019
Cash Flows $32,500,500 $36,900,450 $41,580,000 $44,550,000
Interest Rate 9% 9% 9% 9%
Discount Factor 0.92 0.84 0.77 0.71
PV of Cash Flows $29,816,972 $31,058,371 $32,107,389 $31,560,343

PV of Cash Flows $155,902,265

Scenario 2:

31Dec 31Dec 31Dec 31Dec

2016 2017 2018 2019
Cash Flows $43,500,500 $38,900,450 $32,580,000 $29,550,000
Interest Rate 9% 9% 9% 9%
Discount Factor 0.92 0.84 0.77 0.71
PV of Cash Flows $39,908,716 $32,741,730 $25,157,738 $20,933,965

PV of Cash Flows $131,253,328

 31Dec
2020
$48,250,000
9%
0.65
$31,359,189

31Dec
2020
$19,250,000
9%
0.65
$12,511,179