Step 4: Expenses

Expenses are activated from the Discounted Cash Flow tab by clicking the Expenses link, shown below.

This will move you to the Expense section, which is located on the bottom half of the main DCF sheet. A message will display indicating the Expense section is now activated - at this point if any expense label (including blank or unused expense labels) or any expense amount is clicked, the Expense projection dialog will display. The Expense projection dialog has two modes: Basic and Detail

Basic Mode:
This mode is activated when an expense label, or blank cell in the expense label column, is clicked. From here, an expense amount with annual growth rates (optional) may be entered. Alternatively, expenses may be projected as a percent of effective gross income. 

Detail Mode:
This mode is activated when an expense amount, or blank cell in any of the expense amount columns, is clicked. This will activate the expense projection tool for that expense, for that period of time. For example, the image below shows the expense projection tool after clicking the "Exp 1" Expense for Year 3 and extending the projection one year so the expense projection applies to Years 3 and 4. 

Note that the blue shaded portion of the Analysis Timeline shows the relative position of the expense selected. To further refine the expense projection, one can change the expense amount and growth rate, or change the method of expense calculation to a percent of EGI. These changes can then be projected for the current year by pressing the Apply button, or they can be projected forward for any series of years by moving the slider to the right (each click extends the projection one year), then clicking the Apply button. Note the blue portion of the projection bar moves incrementally as the projection period is extended along the timeline. 

To add more detail for another point in time for the expense, simply, close the dialog, then click on the expense amount where you want to edit the expense.

Note: The expense table will remain active until you move to a different sheet. This means that if you inadvertently click on the expense table, the projection tool will display.