| Loan Analysis |
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I have made several extra payments on my home mortgage. Will FinAlyst report the correct balance on my mortgage each time an extra payment is made?
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Yes. FinAlyst will be able to report extra payments and properly classify them into their principal and interest for each occurrence. It depends on the covenants of your mortgage as to whether the lender will treat extra payments made during the month as having been made at the exact date on which the payment was received or the first of the following month.
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My commercial loan varies with my banks interpretation of prime. Will FinAlyst allow me to define my own index that tracks my bank index?
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Yes. FinAlyst tracks approximately 50 of the most popular indexes that are universally available.
These indexes have history for about the last 20 years. You can however record your own index and tie the loan to your user-defined index. Also, each loan can track an index defined inside the loan data rather than referring to an index.
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I am a lender and need to report an APR to my customer. Will FinAlyst calculate an APR which includes non-repayment amounts such as commitment fees and points?
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Yes.
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I am trying to compare a lease on some equipment to a purchase with a loan. Will FinAlyst do the calculations necessary to compare the alternatives?
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Yes. FinAlyst will produce an amortization of the lease amount to a specific target residual value. Then you can create a graph of this residual value vs the interest. This will let you evaluate an entire range of possible residual values so you can determine the spread of interest related to the residual and thus determine the cost based on best and worst cases.
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Is it worth the effort to check loan accuracy?
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Yes! Data entry errors occur in translating loan documents to a computerized process. Payments can be recorded on the wrong dates and interest indexes are frequently misapplied. The Wall Street Journal (March 21, 1994) reported a survey in which 68% of the loans checked were in error. Two-thirds of the errors were overcharges, averaging over $10,000. Any borrower or lender must be concerned about possible loan mistakes.
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Why not just use a spreadsheet or an amortization program?
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FinAlyst is much more than a program to project constant periodic payments into the future. It allows you to audit all aspects of the history of a loan and project any regular or irregular payment schedule. It accommodates multiple advances, interest rate changes, and abnormal payment schedules.
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I have a line of credit where I make periodic withdrawals and repayments. How can FinAlyst help me?
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FinAlyst is great for these types of loans (or sweep accounts) where there are many varied payments and advances with variable interest rates. You can track the bank’s calculations and verify your payments are recorded properly.
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I purchased a loan where the documentation was very weak and did not include the interest rate being charged. I have available the current balance, the payment amount and the number of payments. Can FinAlyst reconstruct this loan from it’s inception?
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Yes.
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My mortgage is in Canada and I understand that mortgages are calculated differently than in the US. Can FinAlyst calculate my loan scenario?
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Yes. Canadian mortgages are compounded semi-annually regardless of the repayment period. FinAlyst does not tie the compound period to the loan repayment schedule so you can compound either more frequently or less frequently than your payment schedule.
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I am an accountant and need to keep each of my clients loan information separate. Can FinAlyst handle multiple databases of loans?
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Yes. FinAlyst stores it’s loans in a Microsoft Access database. You can create databases for each of your clients and store that database with the permanent records for the client.
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I am an accountant and need to produce 5 year projections of Principal and Interest for all loans for a client to include with their financial statements. Can FinAlyst group and summarize my loans for this purpose?
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Yes. FinAlyst has the reporting capabilities to produce loan amounts for up to 5 years into the future based on calendar or fiscal years. The report summarizes by year the total amount of interest and principal to be paid.
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I am a banker and my back-office system does all of our loan calculations. How can FinAlyst help me?
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We have many banks using FinAlyst for loan workout scenarios or aiding customers in projecting payments prior to loan closing. Also, many backoffice bank systems contain cryptic codes that identify interest rate change dates, payment application, etc. which are difficult to describe to customers. FinAlyst will give you a complete loan history which is neatly laid out and easy to understand to share with your customer. Also, bank auditors use FinAlyst to spot check the accuracy of their backoffice systems and the data input operations.
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My mortgage company has invited me to make semi-monthly payments but will charge a fee to change me from monthly to semi-monthly status. How can FinAlyst help me decide if the change is financially beneficial to me?
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FinAlyst can be used to calculate both scenarios and then you can put in the fee and look at the balances and APR to determine if it is financially best for you to take up the bank’s offer or to make additional payments each month to accomplish the same benefit.
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I am an attorney and we have an embezzlement case and would like to quantify the amounts stolen with an appropriate interest rate that is tied to prime rate. This will help us quantify the loss for our client. Can FinAlyst help us?
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FinAlyst can certainly aid in quantifying this loss and assigning an index so that balances stolen will accumulate earnings. As restitution is made these payments can be input and the resulting statement will quantify the entire miscreant’s dealings including the imputed interest.
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I am a financial adviser to a small college and we want to issue a bond where our P&I payments are due in September and January. We would like to pay an interest only payment each June. Will FinAlyst allow us to produce a statement and projections for such an abnormal payment schedule?
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Yes.
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| Return on Investment |
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I have a piece of real estate that I am considering selling. I know my monthly income for the past and want to determine a selling price that will yield me at least 20% annual return on my investment. How can FinAlyst help me determine my minimum selling price?
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FinAlyst excels at this type of calculation. You simply put in your cash flows (inflows=monthly profits, outflows represent initial investments) and FinAlyst will graph the projected selling price vs the Return on Investment (ROI). Then you can change the data (dynamically) on the graph to investigate how the selling prices effects the ROI and vise versa.
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I am a business appraiser and my client is considering purchasing an operating business venture. We have projected some profits for each period into the future. I want to produce a financial model that will tell me how much I should pay for the business. We know that the business will be worth about $6M in 10 years if we meet our projections. We also expect considerable inflation in the next few years and want to factor this into the calculations. Can FinAlyst do this?
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Absolutely. This again is a Return on Investment calculation. To model this in FinAlyst you simply put in your projected inflows and outflows. Then you must enter some projection of inflation in the inflation index. Then the graph will produce a purchase price vs ROI graph including the inflation you estimated. From this graph you can dynamically change the purchase price and see what effect it has on your ROI, or change the ROI and determine a purchase price.
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I have a series of investments from many different sources. Some of these sources give me some annual return statements but I want to put all my investments in one place and evaluate the return both individually and collectively for my investments. Can FinAlyst do this?
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Certainly. FinAlyst has the capability to evaluate ROI on individual investments or a collection of investments. In order to perform these calculations you enter each investment as a standalone investment in FinAlyst. Then you must enter some value information into the equation. For stock investments this might be the value of the stock as reported in the Wall Street Journal at the end of a year. For real estate or collectables this might be an appraisal or estimated value.
FinAlyst uses these “estimate dates” to determine the ROI both by period and cumulative (inception to date). If the valuation dates are different for the investments, then FinAlyst linearly interpolates between valuation dates for an approximation to the value. This is clearly shown in the calculated data.
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ABC Engineers desire to lease some new computer equipment which will cost $250,000. They have been offered a 3-year lease at $6985 per month with the first and last payments in advance. The equipment will be valued at fair market at the termination of the lease.
The company comptroller has estimated the residual value of the equipment at the end of the lease to be approximately $30,000 plus or minus 25%.
Since we do not know the exact value of the equipment, how can FinAlyst help us make a worst case scenario analysis of this lease investment?
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FinAlyst has extensive graphing capabilities that are dynamic so you can actually watch the values change as you change the parameters (rates and residual value). You simply enter the cash flows into the FinAlyst tables and the Analysis shows the graph where you can change the variables and see the worst case scenario. This analysis can also be done with inflation hedges and tax consequences in the model.
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| Present Value - Net Present Value |
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I want to accumulate $10,000 in a savings account in the next 5 years. Will FinAlyst help me determine what weekly payments will be required at 6% interest to reach my savings goal?
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Yes. FinAlyst is capable of calculating any type of annuity including the one you described. These annuity calculations can also involve irregular deposits, variable interest rates and graph the NPV vs time.
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I am in charge of Capital Budgeting in my firm. We are often presented with various investment opportunities and I must help decide which projects to invest our limited funds. How can FinAlyst help me?
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FinAlyst can be used to investigate any Capital Budgeting problem. You simply model the problem by recording your inflows and outflows of cash on the appropriate table, assign the interest rate to be your cost of capital and then look for the investment that has the highest internal rate of return (IRR) as shown in the graphs for the model.
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I want to purchase a bond that will yield me a 10% return. The bond was originally sold 3 years ago and pays $42.00 semiannual payments. What should I pay for this bond today to yield a 10% return on my investment.
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This is a typical bond type calculation where you know the future flows and the face amount of the bond and need to calculate the present value (PV) of these flows. FinAlyst can certainly provide these calculations.
To model this scenario, you simply put the appropriate cash inflows in the inflow table, the yield desired in the interest rate table and then FinAlyst will calculate the present value on any date you desire.
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I have modeled an investment which seems to result in two different internal rates of return (IRR). How can FinAlyst help me determine the true IRR for this investment.
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FinAlyst can model the investment and calculate the Net Present Value of the investment in order to determine the acceptability of the investment.
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