Overview
Cashflows are set up by adding a number of events. The combination of various events allows you to set up both simple and very complex cashflows.
A cashflow needs one or more events that represent money going out or coming in. These can be outflows (withdrawals, investments, etc), inflows (payments, returns, etc), unknowns (fixed or calculated values), fixed principal payments and interest only payments.
Additionally you can add rate change events and balance date events.
All event types can be set up to occur once or periodically. Depending on the type, some can have values that increase or decrease by an amount, a factor or a percentage.
InterestThing uses the events in the Events tab to generate the specific cashflow data items for which it calculates time intervals, amounts and interest. Data items are displayed in the Schedule tab and the Details tab.
To see which data items are created by a particular event, select it in the Events tab and switch to the Schedule tab or the Details tab.
To see which event created a data item, select it in the the Schedule tab or the Details tab and switch to the Events tab.
Event types
Each event type has its own symbol. As you edit events, they are assigned an ID based on the order in which they appear in the Events tab.
To make it easier to see which cashflow items are generated by a particular event, its symbol and ID are displayed in the ID column. Selecting an event in the Events tab will automatically select the corresponding cashflow items in the Schedule and Details tabs and vice versa.
Outflow events
Outflow events are usually used for investments, expenses, withdrawals, costs, loans, etc.
They appear as negative amounts in the Schedule tab.
Inflow events
Inflow events are used for returns, revenues, deposoits, loan or lease payments, etc.
They appear as positive amounts in the Schedule tab.
Unknown events
Unknown events are used for values that you want to solve for or that you want to be able to change easily.
Unlike outflows and inflows where you enter an amount, unknowns are entered as a factor.
Please note that when using repeating unknowns, the change value is also a factor and not an amount. Always check the Schedule tab to verify that the generated values are what you intended to create.
When a cash flow contains unknown events, InterestThing displays the x Value field and the Auto update checkbox.
Unknown events are displayed in the Events tab as values preceded by an "x" sign, as it multiplies the value in the x Value field by the factor.
To calculate with the value in the x Value field, enter a value and disable Auto update.
To solve for the x Value that results in a zero net present value, enable Auto update.
When checked, InterestThing wil automatically update the x Value, for example when you edit the compute options or when you add, edit or delete events.
Interest only events
This type of event is used in loan and lease situations where interest only payments are used, for example in an interest only loan. are required.
When detected, InterestThing first calculates the accrued interest between the previous event date and the interest only event date and adjusts the payment accordingly.
The effect of interest only payments is that they keep the balance and the interest due (if applicable) at their previous value.
Fixed principal events
This type of event is similar to interest only events, but here you can also specify the principal. The payment is calculated so that the resulting principal is equal to the specified value.
The effect of fixed principal payments is that they
add the specified amount to the balance but keep the
interest due (if applicable) at its previous value.
Please note that for negative balances this will result in a
higher payment and for positive balances in a lower payment.
Fixed principal events are displayed in the Events tab as amounts between square brackets, for example "[120]".
Rate change events
This type of event is used to specify rate changes, for example to calculate loans with variable rates.
Rate changes appear in the rate column in the Schedule tab.
Rate changes are handled so that the interest generated at the previous rate is kept pending (i.e. not capitalized or compounded) and is taken into account in the next non-rate change event. This ensures that interest is always calculated on the same balance, even when there are multiple consecutive rate changes.
Balance date events
This type of event is used to add dates for which you want to
know the balance and interest details.
They are treated in such a way that they do not influence the
interest calculation for the regular events that follow.
Balance date events are displayed in the Schedule tab as lines with a greyed and italic text.
Incompatible events
When calculating non-capitalized simple interest, a cashflow should not contain events that cause all pending interest to be added to the balance, i.e. Interest only and Fixed principal events.
For capitalized simple interest, these may also cause unexpected results when they are not used intentionally.