Agenda – 4 /17/2013. Discuss interest and the time value of money Explore the Excel time value of money functions Examine the accounting measures of profitability Course Evaluations. Some Excel financial functions. Excel Functions are Excel Functions To use them, you must understand the
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Excel Functions are Excel Functions
To use them, you must understand the
TIME VALUE OF MONEY
FV = Principal + (Principal x Interest)
= 1000 + (1000 x .05)
= 1000 (1 + i)
= PV (1 + i)
$1,000 Invested at 5% return
How much money would you have if you invested $1000 each year for 5 years at an interest rate of 5% a year?
FV(rate, nper, pmt, pv, type)
PV(rate, nper, pmt, fv, type)
What would that same amortization table (also called a schedule) look like if the interest was compounded AFTER you paid, rather than BEFORE you paid?
(this is a type 1 on Excel financial functions)
PMT(rate, nper, pv, fv, type)
IPMT(rate, per, nper, pv, fv, type)
PPMT(rate, per, nper, pv, fv, type)
CUMIPMT calculates the cumulative interest between two periods
CUMPRINC calculates the cumulative principal between two periods
The arguments to both functions are the same
Functions require the analysis tool pack add-in
CUMIPMT(rate, nper, pv, start_period, end_period, type)