ÛÛÛÛÛ Û Û ÉÍÍÍÍÍ» Û C Û º º Û H Û ÉÍÍ» Ò º º ÉÍÍ» Ò Û A Û º º º º º º º º Û R Û ÆÍË͵ º º º ÌÍÍÍÍ͹ º º º ÉÍÍÍÍ͵ Û L Û º º º º º º º º º º Û T Û ÉÍÍÍÍ͵ º º º º º º º º º º ÉÍÍÍÍ͵ Û O Û º º º º º º º º º º º º Û N Û º º º º º º º º º º º º Û Û º º º º º Ð Ð º º º º º Û Û ÌÍÍ͵ º º º º º º º º ÌÍÍ͵ Û W Û º º Ð ÈÍͼ Ð ÈÍͼ º º Û O Û º º 1 0 1 º º Û O Û º ÆÍÊ͵ ÈÍÍÍÍ͵ º Û L Û º Version 2.1 º Û A Û Ð ÈÍÍÍÍ͵ Û R Û AN AID FOR MAKING INTELLIGENT FINANCIAL DECISIONS Û D Û Û Û CHARLTON WOOLARD - CopyRight 1989 Û Û ÛÛÛÛÛ (Hit Any Key; "B" for Black/White Display) ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/LOANS/AMORTIZATION ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ This option provides a comprehensive evaluation of a loan. You are asked to input any 4 of the following 5 inputs: Loan amount ? Rate ? Payment ? # payments per year ? Years ? ÍÍÍÍÍÍÍÍÍÍÍ ÍÍÍÍ ÍÍÍÍÍÍÍ ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ ÍÍÍÍÍ I will calculate the missing input (Hit to skip an input). In addition, you will be shown the complete amortization schedule for the loan. You may select any one of 5 different amortization schemes: A) Conventional method B) Sum-of-the-years digits (or Rule of 78) C) Graduated Payments (pays interest first) D) Interest only with balloon payment E) Pay % of Outstanding Balance (Credit Card Scheme) You may also analyze the effects of making higher payments. ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/LOAN ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ PLEASE RESPOND TO ANY 4 OF THE FOLLOWING 5 QUESTIONS: (Hit to skip a question) Loan amount being financed ? Rate (%) ? Payment amount ? # of payments per year ? Years ? ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ Loan amount being financed ? : 10,000 Rate (%) ? : 11 Payment amount ? : # of payments per year ? : 12 Years ? : 4 ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ REGULAR PAYMENTS ARE = $ 258.46 TOTAL INTEREST = $ 2,405.85 Using The Conventional Amortization Method. FINAL PAYMENT = $ 0.00 Using The Conventional Amortization Method. ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/LOAN/CONVENTIONAL METHOD ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ LOAN SPECIFICS ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ TERM OF LOAN = 4.0 YEAR(S) TOTAL INTEREST = $ 2,405.85 TOTAL PAYMENTS = $ 12,405.85 PERIODIC PAYMENT = $ 258.46 FINAL PAYMENT = $ 258.23 PRESENT VALUE = $ 10,000.04 ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/LOAN/CONVENTIONAL METHOD ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ PAYMENT PRINCIPAL INTEREST BALANCE CUM INTEREST 1 166.79 91.67 9833.21 91.67 ( 8/ 3/92) 2 168.32 90.14 9664.89 181.81 ( 9/ 2/92) 3 169.87 88.59 9495.02 270.40 (10/ 2/92) 4 171.42 87.04 9323.60 357.44 (11/ 1/92) 5 172.99 85.47 9150.61 442.91 (12/ 1/92) 6 174.58 83.88 8976.03 526.79 (12/31/92) 7 176.18 82.28 8799.85 609.07 ( 1/30/93) 8 177.79 80.67 8622.06 689.74 ( 3/ 1/93) 9 179.42 79.04 8442.64 768.78 ( 3/31/93) 10 181.07 77.39 8261.57 846.17 ( 4/30/93) 11 182.73 75.73 8078.84 921.90 ( 5/30/93) 12 184.40 74.06 7894.44 995.96 ( 6/29/93) YEAR 1 : ANNUAL INTEREST = $ 995.96 OF 4.0 ANNUAL PRINCIPAL = $ 2,105.56 PERIODIC PAYMENT = $ 258.46 ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/LOAN/CONVENTIONAL METHOD ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ PAYMENT PRINCIPAL INTEREST BALANCE CUM INTEREST 37 231.66 26.80 2692.49 2255.51 ( 7/19/95) 38 233.78 24.68 2458.71 2280.19 ( 8/18/95) 39 235.92 22.54 2222.79 2302.73 ( 9/17/95) 40 238.08 20.38 1984.71 2323.11 (10/17/95) 41 240.27 18.19 1744.44 2341.30 (11/16/95) 42 242.47 15.99 1501.97 2357.29 (12/16/95) 43 244.69 13.77 1257.28 2371.06 ( 1/15/96) 44 246.93 11.53 1010.35 2382.59 ( 2/14/96) 45 249.20 9.26 761.15 2391.85 ( 3/15/96) 46 251.48 6.98 509.67 2398.83 ( 4/14/96) 47 253.79 4.67 255.88 2403.50 ( 5/14/96) 48 255.88 2.35 0.00 2405.85 ( 6/13/96) YEAR 4 : ANNUAL INTEREST = $ 177.14 OF 4.0 ANNUAL PRINCIPAL = $ 2,924.15 PERIODIC PAYMENT = $ 258.46 FINAL PAYMENT = $ 258.23 ( 6/13/96) ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/LOAN/CONVENTIONAL METHOD ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ 1st PAYMENT vs RATE COMPARISONS 4.0 - YEAR LOAN AMOUNTS RATES 10000 12000 14000 16000 18000 11.00% 258.46 310.15 361.84 413.54 465.23 11.25% 259.67 311.60 363.54 415.47 467.41 11.50% 260.89 313.07 365.25 417.42 469.60 11.75% 262.11 314.53 366.95 419.38 471.80 12.00% 263.34 316.01 368.68 421.34 474.01 12.25% 264.57 317.48 370.40 423.31 476.23 12.50% 265.80 318.96 372.12 425.28 478.44 12.75% 267.04 320.45 373.86 427.26 480.67 13.00% 268.27 321.92 375.58 429.23 482.89 13.25% 269.52 323.42 377.33 431.23 485.14 13.50% 270.76 324.91 379.06 433.22 487.37 13.75% 272.01 326.41 380.81 435.22 489.62 ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/LOAN PAYOFF STRATEGY ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ This option accepts information of up to 15 loans, and provides the fastest optimized pay-off strategy for the combined monthly payment amount. In addition, you are allowed to enter either a new (higher) amount, or new (lower) time period, and details describing the effect of this change is provided. You are asked to input the following 4 entries for each loan: Loan amount ? Rate ? Payment ? Loan Type ? ÍÍÍÍÍÍÍÍÍÍÍ ÍÍÍÍ ÍÍÍÍÍÍÍ ÍÍÍÍÍÍÍÍÍ First, all loans will be prioritized for pay-off emphasis. Secondly, each monthly payment is distributed and applied so to minimize interest payments. Finally, a table showing the pay-off period for each loan is provided. The analysis assumes all loans are active, payments and rates are constant throughout the payment period, and the next payment is due in one month. All excess payments are applied to the next loan. ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/LOAN PAYOFF STRATEGY ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ PAY-OFF PRIORITY: OUTSTANDING ANN. MONTHLY LOAN % LINE OF LOAN # BALANCE RATE PAYMENT TYPE INT/PYMT CREDIT 4 4599.00 8.50 % 200.00 RULE OF 78 1 10000.00 11.00 % 268.00 STANDARD 2 3456.00 12.00 % 56.00 REVOLVING 4000 3 5000.00 9.00 % 150.00 INT. ONLY ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/LOAN PAYOFF STRATEGY ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ CURRENT MULTI-LOAN ANALYSIS ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ TIME TO PAY OFF ALL LOANS = 3.4 YEAR(S) (OR 41 MONTH(S)) TOTAL BALANCE = $ 23,055.00 COMBINED RATE (ALL LOANS) = 10.2 % TOTAL INTEREST = $ 4,451.16 MINIMUM MONTHLY PAYMENT = $ 674.00 TOTAL PAYMENTS = $ 21,702.97 PRESENT VALUE OF PAYMENTS = $ 22,078.97 ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ Date of this report : AUGUST 21, 1992 Approximate pay-off date : JANUARY 23, 1996 ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/LOAN PAYOFF STRATEGY ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ MULTI-LOAN OPTIMIZATION RESULTS ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ TIME TO PAY OFF ALL LOANS = 2.8 YEAR(S) (SAVES 7 MONTH(S)) TOTAL BALANCE = $ 23,055.00 COMBINED RATE (ALL LOANS) = 10.2 % TOTAL INTEREST = $ 3,672.10 (SAVES $ 779.06) MINIMUM MONTHLY PAYMENT = $ 800.00 TOTAL PAYMENTS = $ 21,325.52 FINAL PAYMENT = $ -324.23 (ON LOAN 3: INT. ONLY) ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ Date of this report : AUGUST 21, 1992 Approximate pay-off date : JUNE 24, 1995 ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/LOAN PAYOFF STRATEGY ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ MULTI-LOAN EARLY PAY-OFF SCHEDULE ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ LOAN # 1 $ 10,000.00 11.00 % STANDARD Paid in 2 YEAR(S) AND 5 MONTHS LOAN # 2 $ 3,456.00 12.00 % REVOLVING Paid in 2 YEAR(S) AND 9 MONTHS LOAN # 3 $ 5,000.00 9.00 % INT. ONLY Paid in 2 YEAR(S) AND 10 MONTHS LOAN # 4 $ 4,599.00 8.50 % RULE OF 78 Paid in 1 YEAR(S) AND 4 MONTHS ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/LOAN PAYOFF STRATEGY ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ MULTI-LOAN EARLY PAY-OFF SCHEDULE ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ LOAN # 1 $ 10,000.00 11.00 % STANDARD Paid in 2 YEAR(S) AND 5 MONTHS LOAN # 2 $ 3,456.00 12.00 % REVOLVING Paid in 2 YEAR(S) AND 9 MONTHS LOAN # 3 $ 5,000.00 9.00 % INT. ONLY Paid in 2 YEAR(S) AND 10 MONTHS LOAN # 4 $ 4,599.00 8.50 % RULE OF 78 Paid in 1 YEAR(S) AND 4 MONTHS ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ ENTER NEW TIME TARGET IN MONTHS (add a "m" [i.e. "24m"]), OR, ENTER NEW MONTHLY PAYMENT (or, hit to exit) : ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/LEASE ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ When evaluating lease arrangements it is important to know how much financing is being provided. This is the only way to effectively compare lease arrangements. The lease arrangement which provides the most financing is clearly the better choice. This option uses lease payments to calculate the true value of the lease and compares the NET LEASE VALUE with that of an EQUIVALENT LOAN to determine if borrowing offers an advantage over leasing. Obtaining a loan may be better if it provides more financing. NOTE: To utilize this option you must first know your true LEASE CASH OUTFLOW AMOUNTS (payments) for each payment period. These are typically the tax shield of your payments, less the payment amount, and less any lost depreciation tax shields. You may simply hit to repeat entries and avoid retyping, or add a "c" to your last number entry to repeat automatically for the remainder of all payments. ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/LEASE ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ Interest rate (%) ? : 11 Tax rate (%) ? : 28 ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ The lease provides $ 4,900.00 of initial financing. An equivalent loan provides $ 2,054.12 of initial financing. The lease provides $ 2,845.88 more financing than an equivalent loan. BOTTOM LINE : THE LEASE IS PROBABLY MORE ATTRACTIVE. (Use Option A3 or B3-1 for Detailed Buy vs Lease Analysis.) ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/BUY vs RENT ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ This option compares the true NET ADVANTAGE OF A LEASE to BUYING the same asset, over the life of the lease (in years). Both the Financial Advantage (i.e. payments made) and the Operating Advantage (i.e. cash flow, expense savings, etc.) are provided. In addition, you may view a table detailing the cash flow differences of BUYING vs RENTING. ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/BUY vs RENT ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ COMPARISON OF BUYING vs RENTING AMOUNT FINANCED FOR PURCHASE $ 10000.00 AVG TAX DEDUCTIBLE RATE 0.280 INTEREST RATE 0.110 INVESTMENT RATE 0.060 AVG ANNUAL RENT INCREASE 0.020 PERIODIC RENT $ 300.00 EXPECTED ACTUAL SALVAGE $ 3500.00 EXPENSE OF ARRANGING LEASE $ 500.00 ANNUAL EXPENSE SAVING DUE TO LEASE $ 150.00 EXPECTED DURATION OF LEASE 6.0 YEARS LIFE OF LOAN 5.0 YEARS SENSITIVITY ANALYSIS ON "AMOUNT FINANCED" WITH A RANGE OF 8000.000 TO 12000.000 ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/BUY vs RENT ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ANNUAL PRESENT LOAN DEDUCTIBLE CASH FLOW VALUE OF INTEREST INTEREST SAVINGS CASH FLOW AT AT WITH DISC. AT YEAR RENT 0.110 0.280 LEASE 0.060 1 3600 1099 308 -658 -619 2 3672 908 254 -104 -93 3 3745 694 194 -44 -37 4 3820 453 127 23 18 5 3897 182 51 99 74 6 3975 3 1 -3351 -2340 TOTAL 22709 3339 935 -4035 -2997 ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/BUY vs RENT ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ FINANCIAL ADVANTAGE OF LEASE $ -4,493.62 OPERATING ADVANTAGE OF LEASE $ -2,997.34 NET ADVANTAGE OF LEASE $ -7,490.96 (Excluding Downpayments) ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ BUYING IS MORE ATTRACTIVE THAN LEASING. ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ NOTE: VALUE OF LEASE = $ 11,927.07 ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/BUY vs RENT ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ SENSITIVITY ANALYSIS ON "AMOUNT FINANCED" ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ AMOUNT FINANCED = 8000.00 ANNUAL PRESENT LOAN DEDUCTIBLE CASH FLOW VALUE OF INTEREST INTEREST SAVINGS CASH FLOW AT AT WITH DISC. AT YEAR RENT 0.110 0.280 LEASE 0.060 1 3600 879 246 -596 -561 2 3672 727 203 -53 -47 3 3745 555 156 -6 -5 4 3820 362 101 49 38 5 3897 145 41 109 81 6 3975 3 1 -3351 -2340 TOTAL 22709 2671 748 -3848 -2834 ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/BUY vs RENT ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ANNUAL PRESENT LOAN DEDUCTIBLE CASH FLOW VALUE OF INTEREST INTEREST SAVINGS CASH FLOW AT AT WITH DISC. AT YEAR RENT 0.110 0.280 LEASE 0.060 1 3600 879 246 -596 -561 2 3672 727 203 -53 -47 3 3745 555 156 -6 -5 4 3820 362 101 49 38 5 3897 145 41 109 81 6 3975 3 1 -3351 -2340 TOTAL 22709 2671 748 -3848 -2834 NET ADVANTAGE OF LEASE = $ -9,612.05 BUY ! NOTE: VALUE OF LEASE = $ 9,779.06 ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ SAVING/PRESENT VALUE OF ANNUITIES-PERPETUITIES ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ PRESENT VALUE OF ANNUITIES/PERPETUITIES What is the total value of all periodic payments {annuity} at a specific discount rate ? What is the total value of payments made forever {perpetuity} at a specific discount rate ? ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ This option allows you to answer the above questions regarding Annuities and Perpetuities. ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ SAVING/PRESENT VALUE OF ANNUITIES-PERPETUITIES ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ Annual rate (%) ? (include a "c" for continuous compounding): 9 Regular payment amount ? : 400 # of payments per year ? : 6 Total years ? (Hit if Forever) : 20 ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ THE PRESENT VALUE OF THE ANNUITY IS $ 22,199.38 ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ SAVING/SAVING FOR A CERTAIN AMOUNT ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ SAVING FOR A CERTAIN AMOUNT How long will it take to save a certain amount, given specific deposits at a given interest rate ? How much will I save if I make regular deposits of a specific amount at a given interest rate ? How much should I deposit at regular intervals, to save a specific amount at a given interest rate ? ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ This option assists you in meeting your saving goals by providing the answers to the above questions. All deposits are equal. ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ SAVING/SAVING FOR A CERTAIN AMOUNT ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ Annual rate (%) ? (include a "c" for continuous compounding) : 10 # of payments per year ? : 12 PLEASE RESPOND TO 2 OF THE FOLLOWING 3 QUESTIONS: TOTAL YEARS ? : What is the targeted FUTURE AMOUNT ? : What are the regular DEPOSIT AMOUNTS ? : ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ TOTAL YEARS ? : What is the targeted FUTURE AMOUNT ? : 100,000 What are the REGULAR DEPOSIT AMOUNTS ? : 50 ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ YOU MUST SAVE FOR 28 YEAR(S) AND 10 MONTH(S) ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ SAVING/SAVING FOR REGULAR WITHDRAWALS ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ SAVING FOR REGULAR WITHDRAWALS How long can I withdraw a certain amount, given specific withdrawals at a given interest rate ? How much should I invest to allow regular withdrawals of a certain amount over time at a given interest rate ? Given a certain amount, how much can I withdraw at regular intervals over time at a given interest rate ? ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ This option assists you in meeting your withdrawal objectives by providing the answers to the above questions. All withdrawals are equal. ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ SAVING/SAVING FOR REGULAR WITHDRAWALS ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ Annual rate (%) ? (include a "c" for continuous compounding) : 9 # of withdrawals per year ? : 12 PLEASE RESPOND TO 2 OF THE FOLLOWING 3 QUESTIONS: TOTAL YEARS ? : What is the INVESTMENT AMOUNT ? : What are the desired regular WITHDRAWALS ? : ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ TOTAL YEARS ? : What is the INVESTMENT AMOUNT ? : 100,000 What are the desired regular WITHDRAWALS ? : 50 ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ YOU CAN WITHDRAW FOREVER ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ BUSINESS DECISIONS/BUYING & SELLING A BUSINESS ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ Firm "A" is considering buying firm "B" (both are public companies). This option will assist you in determining the market values of both firms, the cost to firm "A" of acquiring firm "B", and the net gain or financial benefit of the acquisition. You provide the stock price and share quantity of both firms. A table of 9 scenarios is developed since firm "B" stock price may fluctuate due to acquisition rumors. This table will display a range of firm "B" stock prices, the effect this movement has on the market value of firm "B", and the cost to firm "A" should it continue to pursue the acquisition. You may then select any one of the 9 price scenarios to produce a second table which displays a range of BENEFIT values, and the COST and NET GAIN for both methods (cash and common stock) of acquiring firm "B". ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ BUSINESS DECISIONS/BUYING & SELLING A BUSINESS ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ Share price of COMPANY A = $ 50 Share price of COMPANY B = $ 34 Intrinsic value of COMPANY A = $ 50,000,000 Intrinsic value of COMPANY B = $ 34,000,000 REASONABLE CASH OFFER TO ACQUIRE/MERGE WITH COMPANY B = $ 42,500,000 NET COST TO ACQUIRE / MERGE WITH COMPANY B = $ 8,500,000 ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ FINANCED BY CASH BY COMMON STOCK ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ BENEFIT COST NET GAIN COST NET GAIN $ 51,700,000 $ 6,800,000 $ 44,900,000 $ -10,245,945 $ 61,945,945 $ 59,775,000 $ 6,800,000 $ 52,975,000 $ -6,535,810 $ 66,310,810 $ 67,850,000 $ 6,800,000 $ 61,050,000 $ -2,825,675 $ 70,675,675 $ 75,925,000 $ 6,800,000 $ 69,125,000 $ 884,459 $ 75,040,540 $ 84,000,000 $ 6,800,000 $ 77,200,000 $ 4,594,594 $ 79,405,405 $ 92,075,000 $ 6,800,000 $ 85,275,000 $ 8,304,729 $ 83,770,270 $ 100,150,000 $ 6,800,000 $ 93,350,000 $ 12,014,864 $ 88,135,135 $ 108,225,000 $ 6,800,000 $ 101,425,000 $ 15,725,000 $ 92,500,000 $ 116,300,000 $ 6,800,000 $ 109,500,000 $ 19,435,135 $ 96,864,864 ÛÛÛÛÛÛÛÛÛ BUSINESS DECISIONS/BUSINESS FINANCIAL PERFORMANCE ANALYSIS ÛÛÛÛÛÛÛÛÛÛÛ This option analyzes the financial performance of any public company (firms that offer common shares of stock). The analyses are based on rules-of-thumbs and generally accepted benchmarks. You provide 15 entries which are typically found in annual reports. From these entries, up to 28 financial ratios are provided. The ratios are categorized by: MANAGEMENT EFFECTIVENESS, OWNERS RETURN, and LENDERS RISKS. At your option, an explanation of each ratio and/or a summary of recommendations are also provided. NOTE: You may direct the output to a printer, to a text file entitled "BUS.TXT", or simply view on your screen. In addition, your financial entries may be stored for future recall. You may only analyze one firm at a time. ÛÛÛÛÛÛÛÛÛ BUSINESS DECISIONS/BUSINESS FINANCIAL PERFORMANCE ANALYSIS ÛÛÛÛÛÛÛÛÛÛÛ Company: ?? BALANCE SHEET INFORMATION Current Assets _________________ Total Assets ________________ Current Liabilities ____________ Retain Earnings _____________ Total Shareholder Equity ____________ OPERATING STATEMENT INFORMATION Revenues _______________________ Cost Of Goods Sold __________ Marketing Expenses _____________ Interest Expenses ___________ Earnings Before Taxes __________ Net Income __________________ OTHER INFORMATION Share Price ____________________ Earnings Per Share __________ Operating Income _______________ Tax Rate ____________________ ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ BUSINESS DECISIONS/INTERNAL RATE OF RETURN ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ This option determines the INTERNAL RATE OF RETURN and the payback period at a specified discount rate. If the investment is not recoverable, you are alerted to this fact. You are asked to enter the initial investment, the discount rate, and a stream of cash flows (if payments are inconsistent) or the amount of fixed payments. If you enter the individual cash flows, you can alter any entry if necessary. NOTE: The periods are unspecified so if you want an annual IRR, be sure to provide annual payments (vs monthly). To end your stream of entries, simply hit . ÛÛÛÛÛÛÛÛÛÛÛÛÛÛ BUSINESS DECISIONS/INTERNAL RATE OF RETURN/FIXED ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ Fixed payment amount : 10 Enter the total number of payments (MAX = 100 Payments) : 15 ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ IRR = -17.75 % Investment is not recoverable when discounted at 9.00% ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ACQUIRING ITEMS/CORPORATE BUY vs LEASE ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ This option compares the true NET ADVANTAGE OF A LEASE to BUYING the same asset, over the life of the lease (in years). You are asked to enter the PURCHASE parameters of the asset, and the LEASING parameters of a lease contract. For the purchase of the asset you are also allowed to structure a loan. The financials of the purchase arrangement are compared with the financials of the lease to provide "the bottom line" - the net advantage of the lease. If the net advantage of the lease is negative, the analysis favors buying. Both the Financial Advantage (i.e. payments made) and the Operating Advantage (i.e. cash flow, expense savings, etc.) are provided. In addition, you may view a table detailing the cash flow differences of BUYING vs LEASING. ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ BUSINESS DECISIONS/BUY vs MAKE ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ This option allows you to accurately determine whether it is better to BUY or MAKE components ("components" is used in the generic sense - it could be anything). You provide cost and tax rate information, as well as investment, depreciable life (max=35), salvage value, cost of capital (or discount rate), and the yearly demand of your components. The present value of the cost to make and the cost to buy (including the effect of all taxes) are provided. In addition, a table of your expenses and cash flows are provided at your option. NOTE: If you select Double-Declining-Balance or Sum-Of-The-Years-Digits as your depreciation scheme, the depreciation method switches to the straight-line method when switching is advantageous. ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ BUSINESS DECISIONS/BUY vs MAKE ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ÍÍÍÍÍÍÍÍÍÍÍÍ CASH FLOWS ONLY (EXCLUDES INVESTMENTS) ÍÍÍÍÍÍÍÍÍÍÍÍ ---- IF BUYING ---- ---- IF MAKING ---- NET BUY CASH FLOW YEAR EXPENSE CASH FLOW EXPENSE CASH FLOW ADVANTAGE 0 0 0 0 -3000 -3000 1 4500 3240 9900 6328 3088 2 4500 3240 7500 4600 1360 3 4500 3240 5100 2872 -368 4 4500 3240 2700 1144 -2096 5 4500 3240 -700 136 -3104 ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ BUSINESS DECISIONS/BUY vs MAKE ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ THE PRESENT VALUE OF THE COST TO MAKE IS $ 15,793.77 THE PRESENT VALUE OF THE COST TO BUY IS $ 12,602.47 YOU SHOULD BUY THE COMPONENTS AT A SAVINGS OF $ 3,191.30 ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ BUSINESS DECISIONS/BREAK-EVEN ANALYSIS ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ This option allows you to quickly assess how many units you should sell in order to recover your cost (i.e. break-even). A 2-column table is provided that illustrates your UNIT and TOTAL VOLUME sales, variable cost, contribution margins, operating income (income before expenses are paid), and break-even (units and sales). In addition, your degree of operating leverage is computed. Operating leverage reflects the amount your income changes for every % change in sales. ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ BUSINESS DECISIONS/BREAK-EVEN ANALYSIS ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ Selling price of the unit : 45 Total fixed cost (usually much larger than variable cost) : 3,000 # of units sold : 19 # of units produced : 20 Variable cost per unit : 20 Your desired [gross] profit impact (in $) : 10,000 UNIT TOTAL SALES = $ 45.00 $ 855.00 VARIABLE COST = $ 20.00 $ 400.00 CONTRIBUTION = $ 23.95 $ 455.00 OPERATING INCOME = $ -133.95 $ -2,545.00 BREAK-EVEN (UNITS) = - 126 BREAK_EVEN (SALES) = $ 178.95 $ 3,400.00 DEGREE OF OPER. LEV. = - -0.34 * At a break-even of 126 units, every % change in sales effectively changes operating income by -0.34 % . * Required unit volume for gross profit of $ 10,000.00 is 543 units. ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ INSURANCE/TERM ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ TERM INSURANCE TERM INSURANCE protects you for only a specified period, or term - usually 5, 10, 20 years. Term insurance pays a benefit only if you die during the period covered. The insurance stops when you stop making payments or when the specified term expires. CHARACTERISTICS: . Low initial premiums . Protection for a specified period . Usually renewable . No cash value . Premium rises with each new term BEST SUITED FOR/WHEN: . Buyer wants consistent and low payments . Buyer is not concerned with cash value or investment value . Buyer wants coverage only for a fixed period of time ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ INSURANCE/TERM ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ Does TERM INSURANCE truly meet my objectives ? Should I use my premium payment dollars differently ? Is TERM INSURANCE really worth it to me ? ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ This option helps you to address the above questions by providing some facts on comparable loan and savings programs. In addition, you may view a table that displays, for each additional year of living, the present cash value of the policy and the net advantage of both a loan and comparable savings. ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ INSURANCE/TERM ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ PRESENT PRESENT NET SAVINGS NET LOAN YEAR OF CUMM. CASH CUMM. VALUE ADVANTAGE ADVANTAGE ADDITIONAL ANNUAL VALUE OF ANNUAL OF OVER OVER LIVING PYMNTS INSURANCE SAVINGS LOAN INSURANCE INSURANCE ÄÄÄÄÄÄ ÄÄÄÄÄÄ ÄÄÄÄÄÄÄÄÄ ÄÄÄÄÄÄÄÄ ÄÄÄÄÄÄÄÄ ÄÄÄÄÄÄÄÄÄÄÄ ÄÄÄÄÄÄÄÄÄ 0 0 0 0 6532 0 6532 1 1200 0 1200 6271 1200 6271 2 2400 0 2472 6020 2472 6020 3 3600 0 3820 5779 3820 5779 4 4800 0 5250 5548 5250 5548 5 6000 0 6765 5326 6765 5326 6 7200 0 8370 5113 8370 5113 7 8400 0 10073 4908 10073 4908 8 9600 0 11877 4712 11877 4712 9 10800 0 13790 4524 13790 4524 10 12000 0 15817 4343 15817 4343 ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ INSURANCE/WHOLE LIFE ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ WHOLE LIFE INSURANCE WHOLE LIFE is the most common type of insurance. You are insured as long as you make payments - usually your whole life (or to age 100). Whole Life accumulates "CASH VALUE" which you can use in a variety of ways. You may borrow it, use as collateral for future payments, or withdraw it. CHARACTERISTICS: . Protection for life . Fixed premiums with growing cash value . More expensive than Term . Flexible usage of cash value (i.e. tax free loans) . Available as UNIVERSAL, VARIABLE and ADJUSTABLE LIFE BEST SUITED FOR/WHEN: . Buyer who is concerned about increases in premium . Buyer who wants Life Insurance for whole life . Buyer who is looking for investment benefits from insurance ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ INSURANCE/WHOLE LIFE ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ Does WHOLE LIFE INSURANCE truly meet my objectives ? Should I use my premium payment dollars differently ? Is WHOLE LIFE INSURANCE really worth it to me ? When is the best time to cancel this insurance ? ÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍÍ This option helps you to address the above questions by providing some facts on comparable loan and savings programs. In addition, you may view a table that displays, for each additional year of living, the present cash value of the policy and the net advantage of both a loan and comparable savings. ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ INSURANCE/WHOLE LIFE ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ PRESENT PRESENT NET SAVINGS NET LOAN YEAR OF CUMM. CASH CUMM. VALUE ADVANTAGE ADVANTAGE ADDITIONAL ANNUAL VALUE OF ANNUAL OF OVER OVER LIVING PYMNTS INSURANCE SAVINGS LOAN INSURANCE INSURANCE ÄÄÄÄÄÄ ÄÄÄÄÄÄ ÄÄÄÄÄÄÄÄÄ ÄÄÄÄÄÄÄÄ ÄÄÄÄÄÄÄÄ ÄÄÄÄÄÄÄÄÄÄÄ ÄÄÄÄÄÄÄÄÄ 0 0 15000 0 6475 -15000 -8525 1 1200 14558 1200 6280 -13358 -8277 2 2400 14129 2472 6092 -11657 -8037 3 3600 13712 3820 5909 -9892 -7803 4 4800 13308 5250 5732 -8058 -7576 5 6000 12915 6765 5560 -6151 -7355 6 7200 12535 8370 5393 -4164 -7142 7 8400 12165 10073 5231 -2093 -6934 8 9600 11806 11877 5074 70 -6732 9 10800 11458 13790 4922 2331 -6536 10 12000 11121 15817 4775 4696 -6346 ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ INSURANCE/LIMITED PAYMENT LIFE ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ LIMITED PAYMENT LIFE INSURANCE LIMITED PAYMENT LIFE is similar to Whole Life except payments are made only as long as you specify. The insurance, however, covers you for your whole life and accumulates "CASH VALUE" which you may access. You may borrow it, use as collateral for future payments, or withdraw it. CHARACTERISTICS: . Protection for life, even after payments stop . Fixed premiums with growing cash value . More expensive than ordinary whole life or term . Flexible usage of cash value (i.e. tax free loans) . Available as universal, variable and adjustable life BEST SUITED FOR/WHEN: . Buyer who is NOT concerned with expensive premiums . Buyer who wants Life Insurance for whole life but can pay-off . Buyer who is looking for investment benefits from insurance ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ INSURANCE/ENDOWMENT ÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛÛ ENDOWMENT INSURANCE ENDOWMENT INSURANCE is a combination of limited payment and an annuity that endows or begins payment at a specified period (i.e. at age 65). Endowment insurance is very flexible and accumulates CASH VALUE rapidly. Payments can be a lump sum or set monthly amounts. CHARACTERISTICS: . Most expensive . Protection for a specific period which usually extends after death . Most flexible - policy can be tailored to coincide with future events . Rapid cash accumulation . Similar to social security BEST SUITED FOR/WHEN: . Buyer wants to use insurance as a retirement plan . Buyer is not concerned with high premium costs . Buyer wants cash paid in an annuity and cash paid upon death