Circular Model & Iterative Calculation in R

In the world of corporate finance, Excel models can often be built with a fair degree of circulatity. The simplest example of the is a Leveraged Buyout (LBO) model. A more complex example of this is an "Entity Level Waterfall" where a corporation may be comprised of an arbitrary number of discrete entities, each of which has its own value, it's own creditors (with varying "priorities"), and who may derive further value from "excess value" from other entities. This is where the circularity happens, where the value of one entity is based on the excess value of other entities, but that excess value is unknown because it itself is based on the same.

There are two aspects of such a model that I find difficult to solve in R. The first is how to best represent entities and claimants. In Excel all of this is tabular, but the table itself implicitly creates a certain degree of manual structuring. The next part that is tricky to solve is the circular aspect of these models.

Not quite sure how to solve the above in R.

Any and all help would be appreciated.

The Outside-Excel-World equivalent of doing things "iteratively" [in Excel] would be "optimization" most of the time;
potentially check out package ROI or CRAN Task View: Optimization and Mathematical Programming (r-project.org)

This topic was automatically closed 42 days after the last reply. New replies are no longer allowed.

If you have a query related to it or one of the replies, start a new topic and refer back with a link.