The PEAT software has the following modules or tabs:
- Discounted Cash Flow or Project Economics. Depending on the module selected when the software first starts, the contents of this Level 1’s tab and its subtabs will change.
- Custom Calculations. Allows you to enter your own custom model and calculations, and link certain cells to the other subtabs.
- Projects. This tab is at the heart of the software’s input assumptions. You can insert, delete, edit, or reorder these Project tabs by first clicking on any Project tab and then selecting Projects | Add, Delete, Duplicate, Rearrange, or Rename Project from the menu. A Project tab is indicative of a project, an implementation path, or an alternative strategic decision. Within each Project tab, the following subtabs are available depending on the module selected:
o DCF: Discounted Cash Flow Model. Revenues, expenses, capital investments, starting and ending years for the cash flow model, discount rate, and tax rates can be entered here.
o DCF: Cash Flow Ratios. Additional balance sheet data can be entered (e.g., current asset, shares outstanding, common equity, total debt, etc.) and the relevant financial ratios will be computed (EBIT, Net Income, Net Cash Flow, Operating Cash Flow, Economic Value Added, Return on Invested Capital, Net Profit Margin, etc.).
o DCF: Economic Results. This tab returns the computed economic and financial indicators such as Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR), Profitability Index (PI), Return on Investment (ROI), Payback Period (PP), and Discounted Payback (DPP). It also features a dynamic chart where you can view the NPV Profile (calculated NPV values depending on different discount rates), time-series of cash flows for the Project, and other calculated financial metrics.
o DCF: Information and Details. Here you can enter information and notes for the Project.
o O&G: Input Assumptions. Revenues, expenses, capital investments, starting and ending years for the cash flow model, discount rate, and tax rates can be entered here.
- Portfolio Analysis. This tab returns the computed economic and financial indicators such as NPV, IRR, MIRR, PI, ROI, PP, and DPP for all the Projectscombined into a portfolio view. The Economic Results (Level 3) subtabs show the individual Project’s economic and financial indicators, whereas this Level 2 Portfolio Analysis view shows the results of all Projects’ indicators and compares them side by side. There are also two charts available for comparing these individual Projects’ results.
- Applied Analytics. This section allows you to run Tornado Analysis and Scenario Analysis on any one of the Projects previously modeled—this analytics tab is on Level 1, which means it covers all of the various Projects on Level 2. You can therefore run Tornado or Scenario on any one of the Projects.
- Static Tornado. Tornado Analysis is a static sensitivity analysis of the selected model’s output to each input assumption, performed one at a time, and ranked from most impactful to the least. This analysis tests all precedent variables in the model independently.
- Scenario Analysis. Scenario Analysis is also a static sensitivity model that can be easily performed through a two-step process: set up the model and run the model. This analysis tests one or two variables through a range of scenarios to determine the outcome of the selected output.
- Scenario Input Settings. This is where you would set up the variables to test and specify their ranges or scenarios.
- Scenario Output Tables. This is where you would run the saved scenarios and obtain color-coded scenario tables (“sweet spots” and “hotspots”).
- Risk Simulation. Set up and run Monte Carlo risk simulations on any of your Projects. Specifically, you can set up probability distribution assumptions on any combinations of inputs, run a risk simulation of tens of thousands of trials, and retrieve the simulated forecast outputs as charts, statistics, probabilities, and confidence intervals in order to develop comprehensive risk profiles of the Projects.
- Set Input Assumptions. Start the simulation analysis by first setting simulation distributional inputs here.
- Simulation Results. Shows the simulated forecast charts (PDF/CDF), simulation risk statistics, percentiles, probabilities, and confidence intervals of your simulation.
- Overlay Results. Multiple simulation output variables can be compared at once using the Overlay Results tab.
- Analysis of Alternatives. This subtab shows the results of the simulation statistics in a table format as well as a chart of the statistics such that one Project can be compared against another.
- Dynamic Sensitivity. After a simulation is run, this is where a dynamic sensitivity analysis is performed.
- Options Strategies. This is where you can draw your own custom strategic map or strategic real options paths. This section only allows you to draw and visualize these strategic pathways and does not perform any computations. The next section, Options Valuation, actually performs the computations.
- Options Valuation. This tab performs the calculations of Real Options Valuation models.
- Options Valuation. Here is where you start by choosing and setting up the real options model to compute.
- Strategy View. Provides a visual example of the selected real option.
- Sensitivity. Runs a static sensitivity table of the real options model.
- Tornado. Develops the Tornado chart of the real options model.
- Scenario. Runs a scenario table of the real options model.
- Forecast Prediction. This is a sophisticated Business Analytics and Business Statistics module with over 150 functionalities.
- Dataset. Enter and edit your data here.
- Visualize. You can chart any data variable you have entered.
- Command. Provides an alternative and quicker way of executing models in the Forecast Prediction module.
- Analysis. Set up the analytical models (choose the model, provide it with the relevant data variables, and set the model parameters).
- Results. Shows the results of the analytical model, if applicable.
- Charts. Charts the results of the analytical model, if applicable.
- Statistics. Returns the statistics of the analytical model, if applicable.
- Portfolio Optimization. In the Portfolio Optimization section, the individual Projects can be modeled as a portfolio and optimized to determine the best combination of projects for the portfolio.
- Optimization Settings. Start the analysis by setting up the portfolio’s objective, decision variables, and constraints here.
- Optimization Results. This tab returns the results from the portfolio optimization process.
- Advanced Custom Optimization. In this tab, you can create and solve your own customized optimization models.
- Knowledge Center. To assist you in quickly getting up to speed in using the software, here you will find quick getting started guides and sample procedures that are straight to the point.
- Step by Step Procedures. Here you will find some quick self-paced lessons on how to use PEAT.
- Basic Project Economics Lessons. This section provides an overview tour of some common concepts involved with cash flow analysis and project economic analysis such as the computations of NPV, IRR, MIRR, PI, ROI, PP, and DPP, as well as the basics of interpreting PDF/CDF simulation forecast charts.
- Getting Started Videos. Here you can watch a short description and hands-on examples of how to run one of the sections within this PEAT software.
- Importing and Uploaded Data. There is a File | Import Data menu function to upload specific Excel files. Locate the sample templates from the installation folder of PEAT (e.g., C:\Program Files (x86)\Real Options Valuation\ROV PEAT) and locate the two template versions, “DCF Upload Template.xlsx” and “DCF Upload Template with Automation.xlsx”. The first file has a simple upload template for 12 years and 6 revenue and cost categories, which is sufficient in most cases. This file has a wide area on the right for additional scratch work as needed. The second file has additional automation and allows up to 10 revenue and cost categories as well as up to 50 years of cash flows, but limited areas on the right for additional scratch work. Regardless of the file used, note the following:
- Not all rows need to be populated. In the appropriate rows, enter the relevant information in the cells with borders. Note that there are error checks for the data inputs, where Min ≤ Likely ≤ Max is required.
- Only worksheets with the prefix “DCF” will be imported into PEAT; other worksheets without this prefix will not be uploaded. This allows you to have additional intermediate calculation worksheets stored in this same workbook that will not be uploaded into PEAT.
- The Short Project Name (cell B5) will become the name of the project tab in PEAT. Make sure this is a unique, short, simple but descriptive name, otherwise the import function will not work correctly. Proceed to enter the Starting Year and Ending Year, where Starting Year < Ending Year. Note that the starting year is the base year to which the discounting will be set as the present value year. Complete the preliminary data input with the range of discount rates and marginal tax rates (the discount and tax rates can be static without setting a range). The template will automatically add the relevant columns based on the ending year entered.
- For each row of revenues, costs, and investments, enter the line item names (column B) and proceed to enter the minimum, most likely, and maximum values for each year. If there are unused rows, leave those sections completely empty. When done, do a save as to create a new file name and exit Microsoft Excel.
- To execute the data import, start PEAT and select Corporate Investments – Stochastic DCF. Then, click on File | Import Data and browse to this saved Excel file. After the import is successful, remember to save the PEAT file. Then, proceed to run the models as usual.
- Note that the import function currently supports only triangular distributions, hence, the minimum, likely, and maximum inputs. These simulation assumptions will be automatically imported into PEAT’s simulation assumptions tab, with a default of 10,000 trials and a seed value of 123. Clearly, these can be changed as required.
- When adding additional projects, just duplicate the “DCF” worksheets as appropriate. Remember to delete unneeded DCF worksheets otherwise empty projects will be imported. Alternatively, rename the worksheet to not include the three letters, DCF, so that these worksheets will not be automatically uploaded.
- Do not make any modifications to the structure of the template such as adding or deleting rows and columns or changing the headers and titles. Making these modifications will invalidate the template and the data import will not run correctly.
