1. Built-in Functions in Excel Financial Functions MAN 327 2.0 Micro-computers & Their Applications

2. FV DataDescription 6%Annual interest rate 10Number of payments -200Amount of the payment -500Present value 1Payment is due at the beginning of the period (see above) FormulaDescription (Result) =FV(A2/12, A3, A4, A5, A6)Future value of an investment with the above terms (2581.40) Returns the future value of an investment based on periodic, constant payments and a constant interest rate. FV(rate, nper, pmt, [pv], [type])

3. DB Returns the depreciation of an asset for a specified period using the fixed-declining balance method. The fixed-declining balance method computes depreciation at a fixed rate. DB(cost, salvage, life, period, [month])

4. DB.. DataDescription 1,000,000Initial cost 100,000Salvage value 6Lifetime in years FormulaDescription (Result) =DB(A2,A3,A4,1,7)Depreciation in first year, with only 7 months calculated (186,083.33) =DB(A2,A3,A4,2,7)Depreciation in second year (259,639.42) =DB(A2,A3,A4,3,7)Depreciation in third year (176,814.44) =DB(A2,A3,A4,4,7)Depreciation in fourth year (120,410.64) =DB(A2,A3,A4,5,7)Depreciation in fifth year (81,999.64) =DB(A2,A3,A4,6,7)Depreciation in sixth year (55,841.76) =DB(A2,A3,A4,7,7)Depreciation in seventh year, with only 5 months calculated (15,845.10)

5. IRR Returns the internal rate of return for a series of cash flows represented by the numbers in values. cash flows must occur at regular intervals, such as monthly or annually. The IRR is the interest rate received for an investment consisting of payments (negative values) and income (positive values) that occur at regular periods.

6. IRR DataDescription -70,000Initial cost of a business 12,000Net income for the first year 15,000Net income for the second year 18,000Net income for the third year 21,000Net income for the fourth year 26,000Net income for the fifth year FormulaDescription (Result) =IRR(A2:A6)Investment's internal rate of return after four years (-2%) =IRR(A2:A7)Internal rate of return after five years (9%) =IRR(A2:A4,-10%)To calculate the internal rate of return after two years, you need to include a guess (-44%) IRR(values, [guess])

7. NPV Calculates the net present value of an investment by using a discount rate and a series of future payments (negative values) and income (positive values).

8. NPV DataDescription 8%Annual discount rate. This might represent the rate of inflation or the interest rate of a competing investment. -40,000Initial cost of investment 8,000Return from first year 9,200Return from second year 10,000Return from third year 12,000Return from fourth year 14,500Return from fifth year FormulaDescription (Result) =NPV(A2, A4:A8)+A3Net present value of this investment (1,922.06) =NPV(A2, A4:A8, -9000)+A3Net present value of this investment, with a loss in the sixth year of 9000 (-3,749.47)

9. PV Returns the present value of an investment. The present value is the total amount that a series of future payments is worth now. For example, when you borrow money, the loan amount is the present value to the lender. PV(rate, nper, pmt, [fv], [type])

10. PV.. DataDescription 500Money paid out of an insurance annuity at the end of every month 8%Interest rate earned on the money paid out 20Years the money will be paid out FormulaDescription (Result) =PV(A3/12, 12*A4, A2,, 0)Present value of an annuity with the terms above (-59,777.15).

11. PMT Calculates the payment for a loan based on constant payments and a constant interest rate. PMT(rate, nper, pv, [fv], [type])

12. PMT DataDescription 8%Annual interest rate 10Number of months of payments 10000Amount of loan FormulaDescription (Result) =PMT(A2/12, A3, A4)Monthly payment for a loan with the above terms (-1,037.03) =PMT(A2/12, A3, A4, 0, 1)Monthly payment for a loan with the above terms, except payments are due at the beginning of the period (-1,030.16)

13. RATE Returns the interest rate per period of an annuity. RATE(nper, pmt, pv, [fv], [type], [guess])

14. RATE DataDescription 4Years of the loan -200Monthly payment 8000Amount of the loan FormulaDescription (Result) =RATE(A2*12, A3, A4)Monthly rate of the loan with the above terms (1%) =RATE(A2*12, A3, A4)*12Annual rate of the loan with the above terms (0.09241767 or 9.24%)

15. CUMIPMT Returns the cumulative interest paid on a loan between start_period and end_period. CUMIPMT(rate, nper, pv, start_period, end_period, type)

16. CUMIPMT AB DataDescription 9%Annual interest rate 30Years of the loan 125,000Present value FormulaDescription (Result) =CUMIPMT(A2/12,A3*12,A4,13,24,0)Total interest paid in the second year of payments, periods 13 through 24 (- 11135.23) =CUMIPMT(A2/12,A3*12,A4,1,1,0)Interest paid in a single payment in the first month (-937.50)