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Business Modeling

Business Modeling. Lecturer: Ing. Martina Hanová, PhD. a theoretical construction, that represents economic processes by a set of variables and a set of logical and/or quantitative relationships between them. Classification by Nature of the Environment : Deterministic Models

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Business Modeling

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  1. Business Modeling Lecturer: Ing. Martina Hanová, PhD.

  2. a theoretical construction, that represents economic processes by a set of variables and a set of logical and/or quantitative relationships between them. Classification by Nature of the Environment: Deterministic Models Stochastic Models Model

  3. Amortization of debt - Loan Repayment Amortizationschedule Financial Modeling

  4. Dr - the rest of the debt/loan in the r-th period D0 - loan amount Mr - amount of the principal in the r-th period ar - the payment made each period - anuity ur - amount of the interest in the r-th period i - the interest rate per period n - number of periods Amortization schedule

  5. Definitions of financial function parameters: Rate – the interest rate per period: Nper– number of periods in the annuity Pmt – the payment made each period. PV – the present value you want to owned right now FV – the future value you want to have after the last payment made Type – indicates when payments are made Type= omitted or 0 – payments are made at the end of each period Type=1 – payments are made at the beginning of each period

  6. Loan of € 5,000 is to be paid with8 constant annual payments payable by the end of the year. Create a plan for repayment of principal, unless the bank uses an interest rate of 7% p.a. with an annual interest period. Amortization loan with constant annuities

  7. 1. The periodic payment for a loan assuming constant payment and constant interest rate: • =PMT(Rate; Nper; Pv; Fv; Type) • Interest + Principal = Total payment • 2. The amount of interest paid each month: • =IPMT(Rate;Per; Nper; Pv; Fv; Type) • Per – the period number for with we compute the interest • Monthly interest = Interest rate * Beginning balace • 3. The amount of balance paid down each month – the payment on the principal: • =PPMT(Rate;Per; Nper; Pv; Fv; Type) • 4. Ending balance for each month: • Ending balancet = Beginning balancet – Monthly principalt

  8. Loan of € 5,000 is to be paid with 8 constant pricipals payable by the end of the year. Create a plan for repayment of anuities, unless the bank uses an interest rate of 7% p.a. with an annual interest period. Amortization loan with constant Principals

  9. Amount of constant principal: • Amountof the debt/loan in the r-th period • Amountof the interest in the r-th period • Amountof the payment in the r-th period

  10. Determination of the number of constant annuities and the last payment of the loan Loan of € 5,000 is to be paid with constant annuities with amount of € 900 payable by the end of the year. Create a plan, unless the bank uses an interest rate of 7% p.a. with an annual interest period.

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