June 12, 2018

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I'm busy working on my blog posts. Watch this space!

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June 5, 2017

We now have a number of spreadsheets available for your use.   No hidden calculations.  No need for NDA's.

Each spreadsheet starts with a tutorial on how to use it.

You may stress test inflation as you see fit.    Use the inflation measure you find most appropriate for you.     Yes, we listed CPI.  For it is the most common is contract, leasing, employment and retirement benefits.

But if CPE or LIBOR is key to your work, the spreadsheets will accept them.

Back test.  See what would have been the outcome if you raised funds for your project in this manner 30 years ago.

Forward test to your projected pattern of inflation.

While doing so, think of how the Statement of Cash Flow, the Income Statement and the Balance Sheet is affected and how is improved.

Where do we think we could be wrong?

If between the Dated Date and First Coupon/Real Return Payment, inflation goes above 12% and then stays there for the life of the agreement.

*My own thought here... if we see inflation of 12% for a continuous 5+year time frame, we have other problems than finding the lowest cost of capital.

These spreadsheets are how we looked at various projects.    So you may have a different method to evaluate a leveraged lease for an airframe or tanker; so may you have a preferred method to study the affects on a municipality or a corporation, shopping mall, power facility, transmission line, toll road, etc.

With the formulas visible, you can improve upon our examples.  Each spreadsheet enables you to increase or decrease the number of years you wish to test.

1) a  10 year RRM vs. the traditional Fixed rate

2) a  10 year RRM vs. the traditional Variable rate

3) a  30 year RRM corporate vs. the traditional Fixed rate

4) a  30 year RRM corporate vs. the traditional Variable rate

5) a  30 year RRM single family loan vs. the traditional Fixed rate

6) a  30 year RRM single family loan vs. an ARM

7) a  100 year RRM municipal vs. a 100 year municipal structure

8) a   30 year RRM leveraged lease vs. a traditional structure

10) a 30 year RRM commercial/retail space financing vs. the traditional structure

11)  a 30 RRM interest only structure vs. the traditional structure

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Real Return Methodologies

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