WELCOME TO THE FINANCIAL VALUE CALCULATOR

AN INTUITION BUILDING TOOL

Choose Your Sector:

Input Your Data
Corporate Real Estate
Healthcare (For-Profit)
Healthcare (Not For-Profit) OR
Hotel/Motel
Supermarket/Grocery
Go To Calculator
Retail

View Instructions
 Calculate the Impact of Improved Energy
Performance
On Your Company's Financial Value
As someone in business, you know that the desire to increase earnings drives your company. You can increase earnings by reducing
energy expenses. Improved energy performance can increase both your company's bottom line and its market valuation. To help you
quantify and communicate the value of improved energy performance for your organization, ENERGY STAR developed the Financial
Value Calculator (FVC).

The FVC uses the prevailing price/earnings ratio to estimate the market value of increased earnings that can result from increased energy
efficiency. The tool uses the corporate data you enter to calculate your company's potential financial returns. Both publicly- and privately-
held companies can use the FVC to assess the potential value of improved energy performance. Importantly, the more complete your
input data are, the more useful your summary will be in planning your commitment to exemplary performance.

Follow the simple steps below to get started.

1. Choose your sector

Select your business sector from the box on the left and then click the "Input Your Data" button on the right. Financial results generated
by the calculator are calibrated based on sector-specific assumptions.

2. Enter your company information

Enter the following five values: total annual utility bill for all of your buildings, total building floor space, total outstanding common shares,
earnings per share, and P/E ratio. (Shareholder information is not required for privately held companies or non-profit organizations.)
Revise the tool’s default values (e.g., analysis term, discount rate) as desired. Included below these data is a short glossary of important
terms to help you understand how the variables and terms are defined.

Perhaps you’re unsure what values to input for your company at this point. If so, click on the "Use Representative Sector Data" button
and industry-specific values will appear in the corporate data worksheet. You can modify these values if you know some of the ones that
are particular to your company. For example, if you know your corporate building portfolio and shareholder information, then you can
overwrite these data.

When you are satisfied with the information you have entered, click "Go to Calculator".

Click Here to Enter Your Company Information

3. Choose your energy performance investment goal
Choose either "Corporate Investment" or "Corporate Building Portfolio" for your energy performance investment goals by clicking on one
of the two round "radio" buttons.

If you choose "Corporate Investment," enter two of the three inputs: initial investment, annual energy savings, or target internal rate of
return. The third input is automatically calculated.

If you select "Corporate Building Portfolio," choose the percentage of your building portfolio to upgrade. You can enter your own
percentage or you can select one of the defaults (i.e., 100, 50 and 25 percent) from the dropdown menu. Next, specify a savings-to-
investment relationship. If you are uncertain about these numbers, choose either of the typical savings-to-investment relationships.
Clicking one of the three radio buttons activates each of these alternatives.

4. Review your potential financial returns

The first table uses an income statement format to calculate net income from potential energy savings. Potential changes in earnings per
share and market value are calculated based on the increase in net income.

The second table provides standard financial analysis metrics (e.g., Net Present Value, payback period). The summary text on the left of
the tables shows potential changes to:
Net Income: Often referred to as the "bottom line." The company’s total earnings, reflecting revenues adjusted for costs of doing
business, depreciation, interest, taxes, and other expenses.
Earnings Per Share: The increased net income divided by the number of outstanding common shares.
Market Value: A company's total number of outstanding common shares multiplied by the current price per share (also referred to
as "market capitalization"). You can improve your market value by increasing your earnings or net income, every dollar of which will
be valued at the current price/earnings ratio.

Click Here to Use the Financial Value Calculator

Version 2.0
Summer 2005
 5. Estimate new energy performance scores
If you have benchmarked part of your portfolio and can estimate an average performance rating, you can estimate the change in this
average score associated with your proposed percent energy reduction.

Choose the "Analyze Your Energy Performance Score" button. On this new page, first select the building or portfolio type from the scroll
down list. Then enter the average portfolio or single building's current energy performance rating. (You can choose to enter the portfolio
or building name.) And then click "Calculate Results" and your building's estimated new rating will be displayed.

Alternatively, you can enter your current Energy Performance Score and a target score and the calculator will estimate the percent by
which you will need to reduce your energy consumption to achieve the desired energy savings. And then click "Calculate Results" and
the tool will display the estimated percent energy reduction.

NOTE: These benchmark score estimates are not exact results and do not compensate for climate or weather. In addition, this tool is not
intended to be a permanent database application or replace other tools that simulate whole building energy consumption.

6. Incorporate estimated energy reduction into FVC

Click "Analyze Results Using FVC" to switch back to the calculator with the estimate energy reduction information entered under Annual
Energy Savings. Enter your investment level in the adjacent cell and the FVC will generate your potential financial returns.

Additional Features
The "Calculator" and "Delta Score Estimator" worksheets have "Print Result" buttons.

Use the "Revise Your Data" button to return to the corporate data work sheet.
Click on "View Cash Flow" to view a table and graph of how your annual energy savings impact on your company's cash flow over a 10-
year period.

Click the "View Management Report" button to create a summary page of the information you entered, your potential financial returns,
and your projected cash flow based on energy savings. These documents can be used to communicate, both internally and externally,
the potential financial value of your ENERGY STAR investment decisions.

Throughout the tool, click on "View Instructions" to return to these instructions.

Click Here to Use the Financial Value Calculator

OR
Return to Welcome Page
For More Information
For more information, please visit the ENERGY STAR web site at:
www.energystar.gov
For questions or comments about this calculator, please email:
ValueCalculator@epa.gov

Version 2.0
Summer 2005
 Calculate the Impact of Improved Energy Performance
On Your Company's Financial Value

Step 1 of 2: Choose your energy performance investment goal

Each option below will calculate the potential returns associated with improved energy performance. You can decide whether
to define particular corporate investment rates or focus on building portfolio investment returns by choosing ONE of the options
below.

1
Save This Scenario
View Instructions Healthcare (Not For-Profit)

● Corporate Investment ● Corporate Building Portfolio

Specify TWO of the following THREE inputs: Select the percentage of your 100%
Initial Investment ($): building portfolio to upgrade:
Annual Energy Savings ($):
Target Internal Rate of Return (%): Specify your investment and savings values.
OR, choose a typical investment and savings value.
Ann. Energy Investment Levels Initial Investment ($)
OR Savings (%) ($/Sq. Foot)
● $-
20% $0.80 $504,000
30% $1.60 $1,008,000
###
###
View Cash Flows ###
Reset Entries Choose Different Sector

Step 2 of 2: Review your potential financial returns

Asset Statement Impacts (10-year average)
Please define your investment goals in Step 1. DMC
Energy Cost Savings $-
Expenses

Depreciation, if any $-
Interest Payments -
Total Expenses $-
Income Before Taxes $-
Income Taxes/(Tax Benefits) $-
Increase in Net Assets $-

Financial Summary
View Management Report Analyze Your Energy Initial Investment $-
Performance Score Annual Utility Savings $-
Increased Earnings per Share (EPS) Need Info Healthcare (Not Fo
Percent Increase in EPS Need Info
Revise Your View
Print Results
Results Internal Rate of Return Need Info
Data Instructions
Payback Period (in years) 0.0
Net Present Value $-
Questions? Comments? Email us at:

ValueCalculator@epa.gov

Version 2.0
 Calculate the Impact of Improved Energy
Performance
On Your Company's Financial Value
View Directions View Definitions
The information you enter below will be used to calculate the potential financial value for your company.

Healthcare (Not
Company Name DMC Sector
For-Profit)

Corporate Building Portfolio Information Default Calculator Information

Total Annual Utility Bill for Buildings * $2,998,135 Analysis Term (years) * 10
Commercial Building Floor Space (Sq. Ft.) * 630,000 Discount Rate * 11%
Energy Cost per Square Foot $4.76 Depreciation Method Straight Line
Depreciation Period, if any (years) 10
Shareholder Information Financing Period (years)
Total Outstanding Common Shares * Cost of Capital (if financed externally)
Earnings per Share * Tax Rate 41%
P/E Ratio *

Required items are shown in red with an asterisk. Shareholder information is not required for privately-held companies or
non-profit organizations.

Please enter your notes here.

Use Representative
Clear Data Go To Calculator Choose Different Sector
Sector Data

Below is a summary of the variables used in the Financial Value Calculator, and their definitions.
Variable Definition
Total Annual Utility Bill Total annual corporate electric and gas expenditures to operate buildings.
Commercial Building Floor Space Building gross square footage.
Tot. Outstanding Common Shares Total common shares issued by a publicly-traded corporation.
Earnings per Share The net income to common shareholders divided by the average number of common shares
outstanding. In the tool, you choose a value that represents the performance of your company over a
multi-year period. Or, simply use your previous year's earnings per share to get started.
P/E Ratio The ratio of current share price to its earnings per share, after taxes, interest, and depreciation. In
the tool, you choose a value that represents the performance of your company over a multi-year
period. Or, simply use a representative P/E ratio to get started.
Analysis Term The analysis period, in years, used to calculate the investment's payback period, internal rate of
return, and net present value. The calculator's default value is 10 years, which assumes your
investment has a long benefit stream.
Discount Rate Percentage rate that captures the user's "opportunity costs" or alternative returns to investment. It is
used to calculate the current value of a stream of future payments -- i.e., energy savings. The
calculator's default value is 11%.
Depreciation Method An accounting method for deducting a one-time cost over a set analysis period. This calculator only
allows for straight-line depreciation.
Depreciation Period Investments have particular depreciation periods; the calculator's default value is a 10-year
depreciation period.
Financing Period The analysis period, in years, used to calculate the costs associated with an externally financed
investment. The calculator assumes that the investment is financed internally -- i.e., financing period
is 0.
Cost of Capital An average percentage rate that a company would pay to raise money through loans or bonds. If no
value is entered, the calculator assumes the investment is financed internally -- i.e., cost of capital is
0%.
Tax Rate Taxes are calculated at the state and local level. The calculator's default value of 41% is a 34%
corporate rate for federal taxes and a 7% rate for state taxes.

Version 2.0
 MANAGEMENT REPORT

Income Statement Impacts*

DMC Annual Savings
Expenses Adjusted for
Energy Cost Savings $- Year Annual Savings Excluding Taxes Taxes Expenses Cumulative Savings
Expenses 1 $- $- $- $- $-
Depreciation (ignoring salvage value) $- 2 $- $- $- $- $-
Interest Payments Need Info 3 $- $- $- $- $-
Total Expenses $- 4 $- $- $- $- $-
Income Before Taxes $- 5 $- $- $- $- $-
Income Taxes $- 6 $- $- $- $- $-
Net Income $- 7 $- $- $- $- $-
Increased Earnings per Share (EPS) #VALUE! 8 $- $- $- $- $-
Percent Increase in EPS Need Info 9 $- $- $- $- $-
10 $- $- $- $- $-
Financial Summary* 11 $- $- $- $- $-
Initial Investment $- 12 $- $- $- $- $-
Annual Utility Savings $- 13 $- $- $- $- $-
Internal Rate of Return Need Info 14 $- $- $- $- $-
Payback Period (in years) 0.0 15 $- $- $- $- $-
Net Present Value $- 16 $- $- $- $- $-
17 $- $- $- $- $-
* All financial summary information is calculated for pre-tax figures.
18 $- $- $- $- $-
Please define your investment goals. 19 $- $- $- $- $-
20 $- $- $- $- $-

AVERAGE* $- $- $- $- $-
*Averages only include non-zero values. These values will not correspond to Income
Statement values when time periods differ.

RETURN TO
PRINT REPORT
CALCULATOR
 Financial Value Calculator
Management Report

Financial Value Analysis

DMCcan improve financial performance by investing in energy performance. As shown in the table below,
an initial investment of $0 to upgrade 100% of its building portfolio will result in an estimated $0 in average
annual utility savings over the next 10 years.

Non-profit providers:
• Each dollar of energy savings is equivalent to generating new revenues of $20 for hospitals and $10 for
nursing homes or medical offices.

For-profit providers:
• A 5% reduction in annual energy costs can increase EPS by one penny for hospitals and one penny for
nursing homes or medical offices.

DMC
Inputs
Total Utility Bill $2,998,135
Commercial Building Floor Space (Sq. Ft.) $630,000
Total Outstanding Common Shares $-
Earning Per Share $-
P/E Ratio $-
Results
Initial Investment $-
Percentage of Building Portfolio Upgraded 100%
Annual Utility Savings $-
Asset Income $-
Increased Earning Per Share Healthcare
Need Info(Not For
Increased Market Value $-
Internal Rate of Return Need Info
Payback Period (in years) -
Net Present Value $-

Version 2.0
Summer 2005
 Financial Value Calculator
Management Report

Cash Flow Projection

The table below shows the estimated impact of DMC's investment in energy performance on its cash flow for the next 10
years. Deducting expenses (depreciation and interest payments) and taxes (assumes a tax rate of 41%) from the annual
1
savings yields an income from assets of $0. The annual savings over the 10-year period will be $0. 0

Expenses Excluding Annual Cash Cumulative

Year Annual Savings Taxes Taxes Asset Income Flows Savings

0 $- $- $- $- $- $-
1 $- $- $- $- $- $-
2 $- $- $- $- $- $-
3 $- $- $- $- $- $-
4 $- $- $- $- $- $-
5 $- $- $- $- $- $-
6 $- $- $- $- $- $-
7 $- $- $- $- $- $-

8 $- $- $- $- $- $-

TOTAL $- $- $- $- $- $-

Print Report Return To Calculator Delete Corporate Logo

Version 2.0
Summer 2005
 Calculate the Impact of Improved Energy Performance
On Your Company's Financial Value

Cash Flow Projection: Option 2

How Do Your Cumulative Savings

Change Over Time?
$1
Expenses Annual Cash Cumulative
Year Annual Savings Excluding Taxes Taxes Net Income Flows Savings $1

0 $- $- $- $- $- $- $1

1 $- $- $- $- $- $- $1

2 $- $- $- $- $- $- $1

Cash Flow
3 $- $- $- $- $- $- $0
4 $- $- $- $- $- $- $0
5 $- $- $- $- $- $- $0
6 $- $- $- $- $- $- $0
7 $- $- $- $- $- $- $0
8 $- $- $- $- $- $- $0
9 $- $- $- $- $- $- 0 1 2 3 4 5 6 7 8 9 10
10 $- $- $- $- $- $- Year
TOTAL $- $- $- $- $- $-

Return To Calculator

Questions? Comments? Email us at:

ValueCalculator@epa.gov

Version 2.0
Summer 2005
 Energy Performance Rating
Delta Score Estimator

What is the Delta Score Estimator?

The Delta Score Estimator estimates the relationship between percent energy savings and change in the energy performance rating.
It assumes a typical energy performance profile and typical building characteristics, and does not account for climate or weather. It
can assist you in quickly setting target savings levels or energy performance ratings for either single buildings or your entire portfolio.
This will allow you to use the Financial Value Calculator to estimate the financial benefits associated with achieving these goals
across your portfolio.

To use the Delta Score Estimator, enter your information into the following fields:
1. Building or portfolio name (optional),
2. Building or portfolio type (e.g., Office, K-12, Hospital (acute or children's), Supermarket, and five Hotel types:
economy/budget, midscale without food & beverage (F&B), midscale with F&B, Upscale, and Upper Upscale),
3. Current energy performance rating score,
4. Proposed percent energy reduction, or
5. Desired energy performance rating score.

If you proposed a percent energy reduction under Step 1 of the FVC, that amount will automatically appear as the proposed energy
reduction on the delta score estimator. Based on the information you enter, the tool will calculate either the score your portfolio can
achieve with the proposed energy reduction or the energy reduction required to achieve a proposed score.

Consider the following as you use this tool within the FVC:

q If you have not benchmarked any buildings yet, the average score for most portfolios is 50.

q If you have benchmarked buildings, you can begin to determine an average score for your portfolio by averaging
calculated scores. These can be weighted by building square footage for a better result.

q If you have worked in the past with service provider or property managers, you may have some ideas regarding percent
savings achievable in your buildings.

Keep in mind that all of your buildings will perform differently and offer different opportunities for savings, but plan for an aggressive,
portfolio-wide success that can be messaged out to shareholders and other stakeholders. Use Portfolio Manager to continue to refine
your understanding of your aggregate success over time.

Return To Delta
Print Instructions
Score Estimator

Version 2.0
Summer 2005
 Energy Performance Rating
Delta Score Estimator
View Instructions
Step 1
ENTER Building or Portfolio Name (Optional):

Select Building or Portfolio Type: Select One

AND
ENTER current energy performance rating:

Step 2
Select one of the following options:
Percent Energy Reduction:
(INPUT a number from 1 to 50 and press "ENTER")
OR %
Desired energy performance rating:
(INPUT a number from 1 to 100 and press "ENTER")

Calculate Results Clear

Results

Please enter all required inputs and

then press 'Calculate' button.

View Instructions Print Results Reset All Entries

Analyze Results Using FVC

Version 2.0
Summer 2005