ABC Company is worried about the increased interest rate of (10%) that Independent Bank imposes on the engine loan relative to the reduced interest rate on the propeller loan (9%). Independent bank influences voluntary repayments on the lan principal, including a 5% penalty, which is why you desire to look into possible ways of repaying the engines loan as soon as possible.

add two independent variables (one that tie in with annual operating free cash flow as a percentage in order to repay the principal of the loan, begin with 12%) and (one that will tie in with the penalty rate annually of 5%).

revise the model to account for the two new additional independent variables.

Question: How would I insert the, "one that tie in with annual operating free cash flow as a percentage in order to repay the principal of the loan, begin with 12%?" How would I add this to the formula?

A B D E F G H L S 6,000.000,00 5 10% 12% 5% i Independent Variables 2 Engine 3 Price of purchase Years of interest till loan maturity 5 Interest 6 Annual operating FCF (Percentage %) 7 Annual penalty rate 8 9 Engine 10 Initial principal 11 Interest on loan 12 Tax shield on interest 13 Closing principal 14 12/31/13 12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 6,000,000 12/31/19 6,000,000 600,000 126,000 12/31/20 6.000.000 600,000 126,000 6,000,000 (474,000.00) s 12/31/21 6,000,000 600,000 126.000 6,000,000 (474.000.00) S 12/31/22 12/31/23 6,000,000 6,000,000 600,000 600,000 126,000 126.000 6,000,000 6,000,000 (474,000.00) $ (6,474,000.00) 6,000,000 6,000,000.00 $ 6,000,000 (474,000.00) S S S S S S Net flows s NPV $ 15 297,324.08 A B D E F G H L S 6,000.000,00 5 10% 12% 5% i Independent Variables 2 Engine 3 Price of purchase Years of interest till loan maturity 5 Interest 6 Annual operating FCF (Percentage %) 7 Annual penalty rate 8 9 Engine 10 Initial principal 11 Interest on loan 12 Tax shield on interest 13 Closing principal 14 12/31/13 12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 6,000,000 12/31/19 6,000,000 600,000 126,000 12/31/20 6.000.000 600,000 126,000 6,000,000 (474,000.00) s 12/31/21 6,000,000 600,000 126.000 6,000,000 (474.000.00) S 12/31/22 12/31/23 6,000,000 6,000,000 600,000 600,000 126,000 126.000 6,000,000 6,000,000 (474,000.00) $ (6,474,000.00) 6,000,000 6,000,000.00 $ 6,000,000 (474,000.00) S S S S S S Net flows s NPV $ 15 297,324.08