Specifying Loan Terms to Create an Amortization Schedule You must specify the loan before generating the amortization table.. After you have specified the loan, click Create Amortization
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Figure 50.1 Investment Menu
The Investment menu, shown inFigure 50.1, offers the following items:
New! Loan opens theLoandialog box Loans are useful for acquiring capital to pursue various interests Available terms include rate adjustments for variable rate loans, initialization costs, prepayments, and balloon payments
New! Savings opens theSavingsdialog box Savings are necessary when planning for the future, whether for business or personal purposes Account summary calculations available per deposit include starting balance, deposits, interest earned, and ending balance
New! Depreciation opens theDepreciationdialog box Depreciations are relevant in tax calcu-lation The available depreciation methods are Straight Line, Sum-of-years Digits, Depreciation Table, and Declining Balance Depreciation Tables are necessary when depreciation calculations must conform to set yearly percentages Declining Balance with conversion to Straight Line is also provided
New! Bond opens theBonddialog box Bonds have widely varying terms depending on the issuer Because bond issuers frequently auction their bonds, the ability to price a bond between the issue date and maturity date is desirable Fixed-coupon bonds may be analyzed for the following: price versus yield-to-maturity, duration, and convexity These are available at different times in the bond’s life
New! Generic Cashflow opens theGeneric Cashflowdialog box Generic cashflows are the most flexible investments Only a sequence of date-amount pairs is necessary for specification You can enter date-amount pairs and load values from SAS data sets to specify any type of investment You can generate uniform, arithmetic, and geometric cashflows with ease SAS’s forecasting ability is available to forecast future cashflows as well The new graphical display aids in visualization of the cashflow and enables the user to change the frequency of the cashflow view to aggregate and disaggregate the view
Edit opens the specification dialog box for an investment selected within the portfolio
Duplicate creates a duplicate of an investment selected within the portfolio
Delete removes an investment selected from the portfolio
If you want to edit, duplicate, or delete a collection of investments, you must select a collection of investments as described in the section “Selecting Investments within a Portfolio” on page 2987 before performing the menu-option
Trang 2Loan Tasks
Suppose you want to buy a home that costs $100,000 You can make a down payment of $20,000 Hence, you need a loan of $80,000 You are able to acquire a 30-year loan at 7% interest starting January 1, 2000 Let’s use Investment Analysis to specify and analyze this loan
In the Investment Analysis dialog box, select Investment! New ! Loan from the menu bar to open the Loan dialog box
Specifying Loan Terms to Create an Amortization Schedule
You must specify the loan before generating the amortization table To specify the loan, follow these steps:
1 EnterMORTGAGEfor the Name
2 Enter 80000 for the Loan Amount
3 Enter 7 for the Initial Rate
4 Enter 360 for the Number of Payments
5 Enter 01JAN2000 for the Start Date
After you have specified the loan, click Create Amortization Schedule to generate the amortization schedule displayed inFigure 50.2
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Figure 50.2 Creating an Amortization Schedule
Storing Other Loan Terms
Let’s include information concerning the purchase price and downpayment These terms are not necessary to specify the loan, but it may be advantageous to store such information with the loan Consider the loan described in the section “Loan Tasks” on page 2993 In the Loan dialog box (Figure 50.2) click Initialization to open the Loan Initialization Options dialog box, where you can specify the down payment, initialization costs, and discount points To specify the down payment, enter 100000 for the Purchase Price, as shown inFigure 50.3
Trang 4Figure 50.3 Including the Purchase Price
Click OK to return to the Loan dialog box
Adding Prepayments
Now let’s observe the effect of prepayments on the loan Consider the loan described in the section
“Loan Tasks” on page 2993 You must pay a minimum of $532.24 each month to keep up with payments However, let’s say you dislike entering this amount in your checkbook You would rather pay $550.00 to keep the arithmetic simpler This would constitute a uniform prepayment of $17.76 each month
In the Loan dialog box, click Prepayments, which opens the Loan Prepayments dialog box shown
inFigure 50.4
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Figure 50.4 Specifying the Loan Prepayments
You can specify an arbitrary sequence of prepayments in the Prepayments area If you want a uniform prepayment, clear the Prepayments area and enter the uniform payment amount in the Uniform Prepayment text box That amount will be added to each payment until the loan is paid off
To specify this uniform prepayment, follow these steps:
1 Enter 17.76 for the Uniform Prepayment
2 Click OK to return to the Loan dialog box
3 Click Create Amortization Schedule, and the amortization schedule is updated, as displayed
inFigure 50.5
Trang 6Figure 50.5 The Amortization Schedule with Loan Prepayments
The last payment is on January 2030 without prepayments and February 2027 with prepayment; you would pay the loan off almost three years earlier with the $17.76 prepayments
To continue this example you must remove the prepayments from the loan specification, following these steps:
1 Reopen the Loan Prepayments dialog box from the Loan dialog box by clicking Prepayments
2 Enter 0 for Uniform Prepayment
3 Click OK to return to the Loan dialog box
Adding Balloon Payments
Consider the loan described in the section “Loan Tasks” on page 2993 Suppose you cannot afford the payments of $532.24 each month To lessen your monthly payment, you could pay balloon payments of $6,000 at the end of 2007 and 2023 You wonder how this would affect your monthly payment (Note that Investment Analysis does not allow both balloon payments and rate adjustments
to be specified for a loan.)
In the Loan dialog box, click Balloon Payments, which opens the Balloon Payments dialog box shown inFigure 50.6
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Figure 50.6 Defining Loan Balloon Payments
You can specify an arbitrary sequence of balloon payments by adding date-amount pairs to the Balloon Payments area
To specify these balloon payments, follow these steps:
1 Right-click within the Balloon Payment area (which pops up a menu) and release on New
2 Set the pair’s Date to 01JAN2007
3 Set Amount to 6000
4 Right-click within the Balloon Payment area (which pops up a menu) and release on New
5 Set the new pair’s Date to 01JAN2023
6 Set its Amount to 6000
Click OK to return to the Loan dialog box Click Create Amortization Schedule, and the amorti-zation schedule is updated Your monthly payment is now $500.30, a difference of approximately
$32 each month
To continue this example you must remove the balloon payments from the loan specification, following these steps:
1 Reopen the Balloon Payments dialog box
2 Right-click within the Balloon Payment area (which pops up a menu) and release on Clear
3 Click OK to return to the Loan dialog box
Trang 8Handling Rate Adjustments
Consider the loan described in the section “Loan Tasks” on page 2993 Another option for lowering your payments is to get a variable rate loan You can acquire a three-year adjustable rate mortgage (ARM) at 6% with a periodic cap of 1% with a maximum of 9% (Note that Investment Analysis does not allow both rate adjustments and balloon payments to be specified for a loan.)
In the Loan dialog box, click Rate Adjustments to open the Rate Adjustment Terms dialog box shown inFigure 50.7
Figure 50.7 Setting the Rate Adjustments
To specify these loan adjustment terms, follow these steps:
1 Enter 3 for the Life Cap The Life Cap is the maximum deviation from the Initial Rate
2 Enter 1 for the Periodic Cap
3 Enter 36 for the Adjustment Frequency
4 Confirm that Worst Case is selected from the Rate Adjustment Assumption options
5 Click OK to return to the Loan dialog box
6 Enter 6 for the Initial Rate
7 Click Create Amortization Schedule, and the amortization schedule is updated
Your monthly payment drops to $479.64 each month However, if the worst-case scenario plays out, the payments will increase to $636.84 in nine years Figure 50.8displays amortization table information for the final few months under this scenario
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Figure 50.8 The Amortization Schedule with Rate Adjustments
Click OK to return to the Investment Analysis dialog box
Specifying Savings Terms to Create an Account Summary
Suppose you put $500 each month into an account that earns 6% interest for 20 years What is the balance of the account after those 20 years?
In the Investment Analysis dialog box, select Investment! New ! Savings from the menu bar to open the Savings dialog box
To specify the savings, follow these steps:
1 EnterRETIREMENTfor the Name
2 Enter 500 for the Periodic Deposit
3 Enter 240 for the Number of Deposits
4 Enter 6 for the Initial Rate
Trang 10You must specify the savings before generating the account summary After you have specified the savings, click Create Account Summary to compute the ending date and balance and to generate the account summary displayed inFigure 50.9
Figure 50.9 Creating an Account Summary
Click OK to return to the Investment Analysis dialog box
Depreciation Tasks
Commercial assets are considered to lose value as time passes For tax purposes, you want to quantify this loss This investment structure helps calculate appropriate values
Suppose you spend $50,000 for a commercial fishing boat that is considered to have a ten-year useful life How would you depreciate it?
In the Investment Analysis dialog box, select Investment! New ! Depreciation from the menu bar to open the Depreciation dialog box
Specifying Depreciation Terms to Create a Depreciation Table
To specify the depreciation, follow these steps:
1 EnterFISHING_BOATfor the Name