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	<title>Video Financial Modelling</title>
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	<link>http://www.videofinancialmodelling.com</link>
	<description>Video Financial Modelling</description>
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		<title>Modelling an Arrangement Fee Circularity</title>
		<link>http://www.videofinancialmodelling.com/modelling-an-arrangement-fee-circularity/</link>
		<comments>http://www.videofinancialmodelling.com/modelling-an-arrangement-fee-circularity/#comments</comments>
		<pubDate>Thu, 03 Jan 2013 12:16:46 +0000</pubDate>
		<dc:creator>admin</dc:creator>
				<category><![CDATA[Blog]]></category>
		<category><![CDATA[arrangement fee circularity]]></category>
		<category><![CDATA[Excel circularities]]></category>
		<category><![CDATA[project finance circularities]]></category>

		<guid isPermaLink="false">http://www.videofinancialmodelling.com/?p=2244</guid>
		<description><![CDATA[Ok, in project finance deals you’re going to come across a particularly circularity around calculating senior debt arrangement fees. This blog tutorial will focus on how to model this circularity. What is an Excel circularity? In basic terms an Excel circularity is where a calculation refers to itself. In Excel you can allow circularities and the number of iterations which the calculation undergoes; however when you’re modelling and there are a few circularities it is best to break these up. Why are arrangement fees circular? Let’s think about this process. Firstly debt arrangement fees are calculated based on the total amount of debt. However debt arrangement fees are used to build up the total construction phase funding requirements, which are funded by debt. So basically as the arrangement fee amount goes up so too does the debt amount, which then causes the arrangement fee to increase. The arrangement fee and debt amount do converge though. Hopefully you see this circularity; however we will look at an example below. An example of arrangement fees For this example you will need to open up the pre-populated spreadsheet and youtube video attached to this blog tutorial. Now in this example we assume that all construction costs are fully debt funded. Arrangement fees are 2% of the debt amount and the other construction phase costs are as per the spreadsheet. Now if we calculate the arrangement fees by multiplying the debt amount by the 2% arrangement fee, you’ll notice that we get a circularity as shown below. Now to break this circularity we need to hardcode a debt amount. You’ll see why this is important soon. Copy and paste the calculated debt amount into the hardcoded amount as shown below. You’ll need to paste the value so push Home, then the Paste dropdown, then values to do this. As shown above, create a check by subtracting the hardcoded debt amount from the calculated debt amount. Now when the model is solved this check amount will be zero. Link up the arrangement fee calculation to the hardcoded debt amount. i.e. the hardcoded debt amount multiplied by the 2%. You&#8217;ll notice that the check will change from zero to a number. Now, copy and paste values the calculated debt amount into the hardcoded debt amount, until the check amount goes back to zero. This will occur when the arrangement fee converges and model is solved. If you liked this, check out our free project finance modelling training by signing up to our newsletter.]]></description>
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		<item>
		<title>Naming Cells and Ranges in Excel</title>
		<link>http://www.videofinancialmodelling.com/naming-cells-and-ranges-in-excel/</link>
		<comments>http://www.videofinancialmodelling.com/naming-cells-and-ranges-in-excel/#comments</comments>
		<pubDate>Tue, 01 Jan 2013 02:29:53 +0000</pubDate>
		<dc:creator>admin</dc:creator>
				<category><![CDATA[Blog]]></category>
		<category><![CDATA[Excel names]]></category>
		<category><![CDATA[Excel naming]]></category>
		<category><![CDATA[name ranges in Excel]]></category>
		<category><![CDATA[naming cells in Excel]]></category>
		<category><![CDATA[naming in Excel]]></category>

		<guid isPermaLink="false">http://www.videofinancialmodelling.com/?p=2233</guid>
		<description><![CDATA[At Video Financial Modelling we like to keep up to date with opinions of other financial modelling and Excel professionals. We had a quick look at an article http://www.fimodo.com/2009/08/3-approaches-to-avoid-complex-off-sheet-references/ which fimodo produced regarding off-sheet references. Whilst fimodo is great and has a lot of fantastic articles, we tended to disagree with the extensive use of named cells and ranges. The remainder of the article was spot on, in terms of both dedicated import lines for each sheet and avoiding multi-level linking. Now, whilst there are some best practice methods of developing a model which are wide spread within the industry, personal preference does come into financial model development. At Video Financial Modelling we like naming cells and ranges within our models. There are a number of reasons for this; however the main two are model audit and efficiency. Model Audit It is much easier to do a simple sense check of a financial model with names. For example if we saw a formula for operating expenditure which says, opex x inf_index x opsind. i.e. this says the operating index multiplied by the inflation index multiplied by the operations indicator. This is much easier than quickly sense checking a formula as follows assG4 x ts33:33 x ts 55:55. This is especially helpful when a third party is looking through your model. Of course, you have to be careful that the right cells and rows are named, however this should be relatively straightforward and no more onerous than looking up ordinary cell references. Efficiency If you start to use standard names regularly in your modelling then you can just type them in rather than going back to the page where the input is on. This is like a shortcut, and should be much quicker than navigating to the actual Excel sheet. How to name cells and ranges You can follow along with some of the below examples in the Excel spreadsheet and video tutorial contained in this blog. Naming Cells Now this is easy, you can simply put the data in a cell, write a name to the left of the data cell, select the data cell and push CTRL +F3. Follow and accept the prompts and the cell will be named. We also have some other tricks for naming numerous cells at one time which you can find in our Excel Functions training course. Ok, let’s do an example. Put 3% into a cell, then label it Inf (for inflation) to the left of the data. Click on the data (3%) again and press CTRL+F3. Follow the prompts until you’ve named the cell. Now if you go onto it, there will be a name in the top left hand of the Excel screen as per below. Naming Ranges Put your data in a row. Type a name in say column E of row. Then select the name, press SHIFT+spacebar, to select the row. Once selected press CTRL+F3 and follow the prompts. Now let’s do an example by naming the inflation index below. Write InfIndex, select the name, then select the whole row by pushing SHIFT+spacebar Push CTRL+F3 and follow the prompts to name the row. User beware – Naming Ranges Now we do acknowledge that the use of named ranges can end in disaster, if they are not setup correctly. Here are a couple of tips to ensure that you setup named ranges in financial models correctly. You should consistently setup time series or data pages starting in the same column, say G. This will allow labels and totals to the left of the first date. Make sure that you name time data ranges and use the named ranges on other pages. This will ensure the other pages time data will be aligned correctly. Split your time data pages into monthly and quarterly/semi-annual data. Project finance models are usually monthly during construction and quarterly/semi/annual thereafter when debt starts to be paid. Now from Excel 2007,(which has extra columns all the way out to XFD or 16,384 columns!) you could get away with an all monthly financial model, however that is a topic for another day. Like this video tutorial. Check out our Excel and financial modelling training courses.]]></description>
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		</item>
		<item>
		<title>Modelling a Major Maintenance Reserve Account (MMRA)</title>
		<link>http://www.videofinancialmodelling.com/modelling-a-major-maintenance-reserve-account-mmra/</link>
		<comments>http://www.videofinancialmodelling.com/modelling-a-major-maintenance-reserve-account-mmra/#comments</comments>
		<pubDate>Sun, 30 Dec 2012 15:35:09 +0000</pubDate>
		<dc:creator>admin</dc:creator>
				<category><![CDATA[Blog]]></category>
		<category><![CDATA[financial modelling]]></category>
		<category><![CDATA[lifecycle capex]]></category>
		<category><![CDATA[major maintenance reserve account]]></category>
		<category><![CDATA[MMRA]]></category>

		<guid isPermaLink="false">http://www.videofinancialmodelling.com/?p=2225</guid>
		<description><![CDATA[In project finance deals, major maintenance is usually very costly and infrequent in nature. For example in a toll road the road surface may need to be overhauled every 10 years. This major maintenance or lifecycle capex is expensive and usually cannot be funded sufficiently with operational cash flows. To get around this problem a reserve called a major maintenance reserve account (MMRA) or lifecycle reserve account (LRA) is usually used. This MMRA reserves cash progressively up until a forecast major capex spend. Modelling a MMRA Ok, so how do we model a MMRA by reserving cash up to forecast capex spends? Let’s assume that we have a: CFADS of $20m pa (assume this is flat); Replacement capex of $25m every 10 years (assume two of these); and assume no interest is received on the MMRA. You can download the Excel spreadsheet and video tutorial related to the example above. Now we are going to use a simple corkscrew account to model cash inflows (reserving for capex) and cash outflows (major capex). We could add in interest, however we will keep it simple in this example. Link up the opening balance to the closing balance of the previous period as per below. Now let’s put in our major capex amount of $25m every 10 years. This is a cash outflow from the reserve. Let us now put in the final part of the equation. We need to reserve $25m every 10 years. Now, we can specify how many periods (years in this case) we want to reserve this over. Let’s say we do it over the 10 years. i.e. $2.5m per annum. Now we are going to use an offset formula as follows to get the right amount to reserve per period. This is shown below. As you can see above there is a maximum of 15 years, which replacement capex can be reserved over. Hence we should put a note on the assumptions page that we cannot enter any number over 15 and the number should be an integer. Finally we sum the total reserve amount up, and link it into the corkscrew account. If you have done everything correctly you should end up with something like the below. Like this video tutorial. Check out our project finance training courses.]]></description>
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		<item>
		<title>5 Must Know Excel Charting Tips</title>
		<link>http://www.videofinancialmodelling.com/5-must-know-excel-charting-tips/</link>
		<comments>http://www.videofinancialmodelling.com/5-must-know-excel-charting-tips/#comments</comments>
		<pubDate>Tue, 25 Dec 2012 15:28:29 +0000</pubDate>
		<dc:creator>admin</dc:creator>
				<category><![CDATA[Blog]]></category>
		<category><![CDATA[best excel charting tips]]></category>
		<category><![CDATA[excel 2007 charts]]></category>
		<category><![CDATA[excel charting]]></category>
		<category><![CDATA[excel charting tips]]></category>

		<guid isPermaLink="false">http://www.videofinancialmodelling.com/?p=2217</guid>
		<description><![CDATA[This is a quick video blog tutorial showing you some of the must know Excel charting tips. You can follow on with some examples by opening both the above Excel spreadsheet and the video tutorial. Tip 1: F11 to quickly chart Simply select data and then press F11 to chart the data. You can also select multiple rows by holding down the CTRL key down. Tip 2: F4 redo How many times do you have to change the formatting such as font sizes on a chart? Well this is a handy tip. Simply change the size of the font on one axis, then select another the other axis font and press F4. This will redo the previous action and change the size of this font. Tip 3: Putting another axis on a chart This is an easy one. Simply select the data on the chart which you want to put on the second axis. Then select Layout, Format Selection and Secondary Axis. Tip 4: Adding a dynamic title Once you have a chart, simply select the chart, press Layout, Chart Title then = the cell with the data label. Tip 5: Adding new data to a chart Now this is a great little tip. To add new data to an existing chart, simply select the data, press CTRL+c to copy the data, then select the chart and push CTRL+v to paste. It is that simple. If you liked this blog tutorial check out our online Excel and financial modelling training courses.]]></description>
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		<title>Checks and Balances &#8211; Excel 2007 Conditional Formatting</title>
		<link>http://www.videofinancialmodelling.com/checks-and-balances-excel-2007-conditional-formatting/</link>
		<comments>http://www.videofinancialmodelling.com/checks-and-balances-excel-2007-conditional-formatting/#comments</comments>
		<pubDate>Wed, 19 Dec 2012 03:53:29 +0000</pubDate>
		<dc:creator>admin</dc:creator>
				<category><![CDATA[Blog]]></category>
		<category><![CDATA[Excel 2007 conditional formatting]]></category>
		<category><![CDATA[Excel conditional formatting]]></category>

		<guid isPermaLink="false">http://www.videofinancialmodelling.com/?p=2198</guid>
		<description><![CDATA[What is conditional formatting? Conditional formatting in Excel ensures cells are formatted based on certain criteria. For example if we have a cell is equal to “No” and we want to colour all cells equal to “No” red, then we can do this using conditional formatting. Why use it in financial modelling? There are a number of reasons you would use conditional formatting in in a financial model. One of the major reasons is to ensure model integrity through checks and balances. Examples of this include: ensuring that your balance sheet balances; and there are no negative cash balances etc. Conditional formatting gives the financial modeller a visual representation as to whether these checks are met and the financial model integrity is upheld. Using conditional formatting for model checks and balances? Ok, the best way to learn conditional formatting is probably to look at a couple of examples. If you haven’t already done so open up the spreadsheet and the youtube video at the top of this blog tutorial. Ok first how do we find the conditional formatting button? Go to the: Home menu; the go to Conditional Formatting; and then we are going to use the New Rule and the Manage Rules. See below for a diagram showing the conditional formatting button. Now if we had a cell with Check and Ok and we wanted to change the cells: so that when it equalled Check it would come up with a red background and white font; and when it equalled Ok it would come up with a green background and black font. So, let’s select the Ok and Check by holding down the shift key and using your arrow keys (or your mouse) and holding down the left click. Once selected let’s go to Home, click the Conditional Formatting button and select the New Rule button. You should come up with the following screen. Enter in Format only cells that contain. Then select equal to and Check. Now select format and choose fill, select red and then go to font and select white under colour. Push Ok and then Ok again. The Check should now have a red background with white font as shown below. Whilst the Ok and Check cells are still selected go back to the conditional formatting button and select New Rule. Repeat the same procedure as above using equal to and Ok then select a green background with black font. You should come up with something like the below figure. Now have a play around by changing the Check to Ok and vice versa. You’ll notice that the cells change formatting based on the value. If you like this article, check out our training course Excel Shortcuts which has plenty more tips and tricks.]]></description>
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		<item>
		<title>Mini-Perms in Project Finance</title>
		<link>http://www.videofinancialmodelling.com/mini-perms-in-project-finance/</link>
		<comments>http://www.videofinancialmodelling.com/mini-perms-in-project-finance/#comments</comments>
		<pubDate>Wed, 03 Oct 2012 07:21:37 +0000</pubDate>
		<dc:creator>admin</dc:creator>
				<category><![CDATA[Blog]]></category>
		<category><![CDATA[mini-perm]]></category>
		<category><![CDATA[mini-perms]]></category>
		<category><![CDATA[project finance modeling]]></category>

		<guid isPermaLink="false">http://www.videofinancialmodelling.com/?p=2170</guid>
		<description><![CDATA[In this blog tutorial the Video Financial Modelling team dives into the world of mini-perms. And no we are talking about those 80’s hairstyles. What are Mini-Perms? Mini-perms are lending instruments which are intended to be refinanced out after a short timeframe usually 5-7 years. A number of project finance and PFI deals have been done using a mini-perm financing structure given the lack of liquidity in the long term lending market post the GFC. In this tutorial we will look at why mini-perms are being taken up, the different types of mini-perms and the issues related to these instruments. Why are mini-perms being taken up? Mini-perms have been promoted by banks, in a large number of financial markets, including in the UK PFI market. The main reasons for their use include: concerns over long-term liquidity – an example of this is the introduction of Basel III outlining a global regulatory standard for capital requirements; the banks’ inability to underwrite and syndicate deals, with the resultant dependence on bank clubs for funding. i.e. banks are being forced to lend and hold; and a certain degree of opportunism among those banks still in the market. Where there is limited liquidity for deals, banks prefer mini-perms given the short term over which they can amortise their arrangement fees. In addition there are fewer active lending banks in the post GFC world (i.e. less competition), hence there where a process isn’t competitive or there is limited appetite banks can dictate there terms. Types of mini perms There are typically two types of mini-perms, a hard mini-perm and a soft mini-perm. We will look at each in turn. Hard Mini-Perm A hard mini-perm is a short term loan that mimics a longer term amortisation profile, but with a bullet repayment at the end of the tenor. Legal maturity of this instrument is typically around 5-7 years, forcing the borrower to refinance before maturity or face default. The main disadvantage is the default and refinancing risk for all stakeholders (funders, borrower and Government), which in a PFI deal may mean the termination of the Concession. Soft Mini-Perm A soft mini-perm is a long term loan with a mechanism to incentivise the borrower to refinance after an initial short period usually 5-7 years. Two methods for incentivising the borrower include: ratcheting up margins post the initial period; and using a cash sweep post the initial tenor A soft mini-perm is a structure without the default risk of a hard mini-perm, where the loan maturity remains long-term. The soft mini-perm has been used in UK PFI and continues to be promoted by banks on a number of projects. Mini-Perm Financial Modelling Let’s look at some examples of mini-perms assuming the following inputs. You can follow along by downloading the spreadsheets and youtube video. Also note that this analysis assumes that there are no refinancing fees etc. For all the scenarios below we use LIBOR of 400bps and a constant CFADS of 1,300 per month. Hard mini-perm: 5 year initial tenor, bullet at maturity, amortisation profile mimics 20 year tenor, margins 250bps and a credit foncier repayment profile. Note that a credit foncier repayment profile is like a home loan mortgage with fixed instalments. See our tutorial, CFADS and DSCR sculpting, which goes into the credit foncier repayment profile in depth. Using the actual margins for the hard mini-perm we get the following. As mentioned the hard mini-perm is only short term debt and hence has no margins post the initial tenor. Borrowers usually have to estimate the margins post this short term debt tenor. Note that given the short legal tenor of the facility, the borrower must refinance the loan at the end of the initial tenor. If the borrowers were to assume that the margins continue at 250bps we would get a normal credit foncier profile as per the below. Given the constant CFADS we would get a DSCR that is constant. Soft mini-perm: 20 years, margins 250bps then ratcheting up to 500bps post 5 years, also a credit foncier profile. As you can see in the below the rachet up in margins after the initial tenor of 5 years causes the debt service to increase in mid 2016. With a constant CFADS this margin rachet would decrease the DSCR and eat into potential equity distributions. Given the high debt service post margin rachet (and the likelihood of these rates occurring) borrowers usually assume different margins post the margin rachet. If we assume that the margins continued at 250bps then we would have the exact same profile as in the hard mini-perm assumed rates case. As you can see from the above although the dynamics of soft and hard mini-perms are quite different it could be that borrowers could assume the same financial forecasts, particularly with respect to debt service modelling. One should note however, that the hard mini-perm is inherently more risky given the refinance/default risk. Now let’s look at a number of issues which occur with both hard and soft mini-perms. Issues with mini-perm structures There are a number of issues which borrowers face with mini-perm structures. These include: Hedging: do you put a short term swap in or long term swap? Short term swaps will face refinancing risk on the underlying rate, usually LIBOR. Long term swaps assume a certain repayment profile which may change over time; Affordability: what assumptions do the stakeholder (predominantly the borrower and the Concession grantor) make about margins, underlying interest rates, tenor and amortisation profile. Sharing of risks: who takes the risk on margins, underlying interest rates, tenor and amortisation profile? The above issues are resolved on a project by project basis. Help us keep delivering great content by sharing using the below social media buttons.]]></description>
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		<item>
		<title>Why you don&#8217;t need to be a VBA Macro master to build a Financial Model &#8211; Part 2</title>
		<link>http://www.videofinancialmodelling.com/why-you-dont-need-to-be-a-vba-macro-master-to-build-a-financial-model-part-2/</link>
		<comments>http://www.videofinancialmodelling.com/why-you-dont-need-to-be-a-vba-macro-master-to-build-a-financial-model-part-2/#comments</comments>
		<pubDate>Sat, 22 Sep 2012 10:19:39 +0000</pubDate>
		<dc:creator>admin</dc:creator>
				<category><![CDATA[Blog]]></category>
		<category><![CDATA[financial model macros]]></category>
		<category><![CDATA[macros]]></category>
		<category><![CDATA[VBA macros]]></category>

		<guid isPermaLink="false">http://www.videofinancialmodelling.com/?p=2049</guid>
		<description><![CDATA[In part 2 of our “Why you don’t need to be a macro master to build a Financial Model” we are going to look at the main types of macros you’ll need to produce an advanced financial model. The three types of macros we are going to look at are: A goal seek macro – can be used to break a circularity A single cell copy and paste macro – we covered this in part 1 of this series A multiple cell copy and paste macro Goal Seek Macro Ok, this is probably the easiest macro to implement. It is very similar to the single cell copy and paste macro. If you are not aware of what a goal seek is we will try and sum it up in a line or two. A goal seek will try and solve a certain cell to a specified value by changing another. If you look at the below figure we have 50 sales, each with a profit margin of $3.5/unit giving a total profit of $175. We want to know what the profit margin would have to be to get a total profit of $200. Obviously the profit margin has to be $4 per unit. But look how we found it. We goal seeked it by setting the total profit cell to 200 by changing the profit margin per unit. Ok, now let’s cheat by going back to our spreadsheet in part 1. As per part 1 we are going to record a macro. Go to View, Macros, Record Macro. Let’s call the macro GoalSeek. Go to the DebtCheck value and select Data, What-if Analysis and then Goal Seek. We want to select to value 0, by changing cell DebtHard value as per the below figure. Stop the recording by pressing the stop button in the bottom left hand corner. Now let’s edit the macro. Go to View then Macros, View Macros. Select the GoalSeek macro and press edit. We are going to delete the Range(&#8220;D13&#8243;).Select at the top. And we are going to replace the cells with their actual names as per below. Now go back to the spreadsheet. Put 12,500 into the DebtHard cell (G12). Go to Data, Macro and View Macro. Select GoalSeek and press Run. This should solve the macro and set the DebtCheck to 0. Single Cell Copy and Paste Macro Now we looked at a single cell copy and paste macro in the first part of this series so we are not going to cover it here. If you want to check out that article, click here. Multiple Cell Copy and Paste Macro Ok, we’re going to leave you to do a bit of homework on this one. Depending on how you go we might look at doing a third part to this tutorial. Go to the spreadsheet and scroll down to question two. See how you go with it. If you’d like us to do a third part to this macros series leave us a comment or send us an email. Hint: In this question you might find that the countif function will come in handy. We cover macros in detail in our advanced toll road training course. Click here to check it out.]]></description>
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		<item>
		<title>Why you don&#8217;t need to be a VBA Macro master to build a Financial Model &#8211; Part 1</title>
		<link>http://www.videofinancialmodelling.com/why-you-dont-need-to-be-a-vba-macro-master-to-build-a-financial-model-part-1/</link>
		<comments>http://www.videofinancialmodelling.com/why-you-dont-need-to-be-a-vba-macro-master-to-build-a-financial-model-part-1/#comments</comments>
		<pubDate>Tue, 11 Sep 2012 18:48:10 +0000</pubDate>
		<dc:creator>admin</dc:creator>
				<category><![CDATA[Blog]]></category>
		<category><![CDATA[financial model macros]]></category>
		<category><![CDATA[macros]]></category>
		<category><![CDATA[VBA macros]]></category>

		<guid isPermaLink="false">http://www.videofinancialmodelling.com/?p=2028</guid>
		<description><![CDATA[Many self-proclaimed financial modeling experts will tell you that you need to have a good grasp of Visual Basic for Applications (VBA) and macros. Well at Video Financial Modelling we are here to tell you that you don’t. Well not if you’ve read this article. Why do we need macros? In simplistic terms a macro is a program that implements a task. VBA macros are often used to automate tedious financial modeling tasks or to break circularities. Why don’t you need to be a macro master? Well there are a number of reasons why you don’t need to be a VBA macro master. Firstly, we’re going to give you some common macros that you can simply copy and paste into VBA in your financial model Secondly, it is really easy to record your own macros and then manipulate them to suit your particular situation. We’ll look at an example a bit later Thirdly and finally in all the financial models we have seen (and we’ve seen a lot) there are only a few situations that require a macro. We will run through each below. Firstly let’s look at an example on how to record a macro. Example – Manually recording a macro and then manipulating it In this example we are going to look at Firstly open the accompanying blog workbook. Also remember you can watch the blog youtube video to follow this example. To start recording a macro, press View on the menu and then select Macros. Select Record Macro on the popdown menu. Let’s call the macro DebtSolve. Select the Debt Amount – Calculated value and then copy the cell (CTRL+c) and paste special values (Home, Paste, Values) in the Debt Amount – Hardcoded cell. Press enter. Now press the stop button in the bottom left hand corner. Go to Data, Macro and push View Macro. Then select the DebtSolve macro and press edit. We are now going to put the named cells into the macro and add in a loop. Ok, let’s firstly put the relevant named ranges in. Just copy both the DebtCalc and DebtHard and put them in place of the relevant cells in the VBA file. Now let’s add the loop. Simply copy and paste the following code: Do While Range(&#8220;DebtCheck&#8221;) 0. We’ll also have to put in: Range(“DebtCalc”) to replace the Selection before copy. Place it at the start of the code after the Sub Debt Solve() and the green commentary. And now put a Loop before the End Sub. The final macro should look something like this. This loop will keep copying and pasting the calculated debt amount into the hardcoded debt amount, until these values converge and the debt check becomes zero. Now let’s go and select Insert on the menu, select Shape and then a rectangle. Draw it on the sheet. Then right click on the rectangle and select Assign Macro and press DebtSolve. Now press the button you just created and voila you’ve created a macro that solves a common financial modeling circularity. Change the hardcoded value or the arrangement fee and press the button again. It should solve. In the next part to this macro series we are going to look at the main types of macros you’re going to need when you’re financial modeling.]]></description>
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		<title>Brownfield Infrastructure Asset Valuation</title>
		<link>http://www.videofinancialmodelling.com/brownfield-infrastructure-asset-valuation/</link>
		<comments>http://www.videofinancialmodelling.com/brownfield-infrastructure-asset-valuation/#comments</comments>
		<pubDate>Sat, 01 Sep 2012 12:23:01 +0000</pubDate>
		<dc:creator>admin</dc:creator>
				<category><![CDATA[Blog]]></category>
		<category><![CDATA[infrastructure valuation]]></category>
		<category><![CDATA[ppp valuation]]></category>
		<category><![CDATA[project finance valuation]]></category>

		<guid isPermaLink="false">http://www.videofinancialmodelling.com/?p=2003</guid>
		<description><![CDATA[Ever wonder how to value a Brownfield infrastructure asset? Well check out our Ezine article. Click here. Also grab the video and accompanying spreadsheet.]]></description>
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		<title>Modelling a Debt Service Reserve Account (DSRA)</title>
		<link>http://www.videofinancialmodelling.com/modelling-a-debt-service-reserve-account-dsra/</link>
		<comments>http://www.videofinancialmodelling.com/modelling-a-debt-service-reserve-account-dsra/#comments</comments>
		<pubDate>Thu, 02 Feb 2012 21:33:13 +0000</pubDate>
		<dc:creator>admin</dc:creator>
				<category><![CDATA[Blog]]></category>
		<category><![CDATA[debt service reserve account]]></category>
		<category><![CDATA[DSRA]]></category>
		<category><![CDATA[project finance course]]></category>
		<category><![CDATA[project finance modelling]]></category>
		<category><![CDATA[project finance training]]></category>

		<guid isPermaLink="false">http://www.videofinancialmodelling.com/?p=1357</guid>
		<description><![CDATA[Blog Downloads: This tutorial looks at modelling a debt service reserve account or DSRA. What is a Debt Service Reserve Account for? A Debt Service Reserve Account or DSRA is a cash reserve which is common place in project finance deals. The DSRA is usually sized to x months of forward looking debt service. For example lenders may require a 6 month look-forward DSRA. The DSRA gives additional security for lenders in the event that a project has insufficient funds or CFADS to pay debt service. Where the DSCR is below 1. i.e. CFADS&#60;debt service or there is insufficient cash to meet debt obligations, then the DSRA can be used to bridge the shortfall. For example a DSRA may give project companies additional time to resolve operational issues which may occur prior to default. For those who have forgotten, a simple definition of debt service is “debt interest + principal (or repayments)” and CFADS is simply cash flow available for debt service. Both of these terms will be defined fully in the financing documentation. Funding the Debt Service Reserve Account The funding of the DSRA can take many forms and is fully documented in the projects financing documentation. In most cases the debt service reserve account will be funded on the last day of construction for a greenfield project, or where a brownfield asset is being privatised it would be funded on the acquisition date. It should be noted that in special circumstances the DSRA can be built up from project cashflows during operations. Over the debt tenor the balance of the DSRA is more than likely going to change (except where there is constant debt service, aka credit foncier repayment profile, a case we have explored in the blog CFADS and DSCR &#8211; Sculpting) So after construction or acquisition how is the DSRA funded? Another way to phrase that question is how does the DSRA fit into the cash flow waterfall? In the majority of cases the DSRA is funded post debt service but before distributions to equity or sub-debt. Cash is released from the DSRA when the balance is to high and taken from cash flow post debt service when there is an insufficient balance. How to account for the DSRA The DSRA is cash account and as such is an asset on the balance sheet. When the account is funded (usually at construction end), we would also credit our funding sources, usually debt (liability) and shareholder loans (can be viewed as debt or shareholders equity). For cash flow into the DSRA we would debit the DSRA and credit cash. For cash flow out of the DSRA we would credit the DSRA and debit cash. Modelling the DSRA As always the best way to learn a modelling technique is with a worked example. Let’s say that we had the following debt service profile. 31 Dec 2011 – 31 30 June 2012 &#8211; 24 31 Dec 2012 – 42 30 June 2013 – 10 (this is the final date of debt repayment) What would the DSRA amount be for Dec 2011, June 2012 and Dec 2012 if we were reserving for a 12 month DSRA. If you calculated 66, 52 and 10 you’d be correct. Note that the Dec 2012 DSRA only has one more period of debt service equating to 10. If you haven’t fully grasped this concept check out the youtube video for a more in depth view of how the DSRA is modelled. We hope you’ve enjoyed this blog tutorial. Check out more great tips in tricks in our advanced project finance self-study training course.]]></description>
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