From the course: Corporate Finance: Robust Financial Modeling
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Preparing business rules
From the course: Corporate Finance: Robust Financial Modeling
Preparing business rules
- By now, you're probably itching to get stuck into building your financial model. So let's do it. There are several types of financial models, but on this occasion, let's go ahead and build a lifecycle costing for the customer relationship management system, or just CRM. I've chosen this type of model, because it's relatively simple to build and understand. So let's get straight into it. Make sure that the Excel exercise file for this video is open. We're going to start by capturing some business rules. These are sometimes known as assumptions. So make sure that you're on the business rules worksheet. In this model we'll be discounting future use cash flows, so we need something called a discount rate. Let's go ahead and use 2.81%, and type this number into cell C4 and hit enter. Next, we need an assumption for the annual growth rate of maintenance costs. Let's use 3.25% based on a historical analysis of the…
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