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CSE 2337

CSE 2337. Chapter 6 Financial Calculations. Interest. Factors Time Risk monetary policies Ways interest is calculated simple compound. Simple Interest. Paid solely on the amount of the original principal value

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CSE 2337

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  1. CSE 2337 Chapter 6 Financial Calculations

  2. Interest • Factors • Time • Risk • monetary policies • Ways interest is calculated • simple • compound

  3. Simple Interest • Paid solely on the amount of the original principal value • Simple interest = Principal * Interest rate per time period * Number of time periods

  4. Compound Interest • Adding interest earned each period to the principal for purposes of computing interest for the next period • Has greater total value than simple interest • Used by most financial institutions • Annual percentage yield (APY) • Equivalent yearly simple interest rate, taking compounding into account • Annual percentage rate (APR) • Reflects interest being paid on actual amount borrowed

  5. PMT • Finds value of payment per period, assuming are constant payments and constant interest rate for duration of loan • PMT(rate,nper,pv,fv,type)

  6. PMT Arguments

  7. Example • 1,000,000 Loan, 8% rate, compounded quarterly, over 5 years

  8. Cell Referencing

  9. Other Financial Functions

  10. Other Loan Options

  11. Amoritization Table

  12. Principal and Interest Payments • PPMT function • Calculates the value of the principal payment for a specified period • PPMT(rate,per,nper,pv,fv,type) • IPMT function • Calculates the value of the interest payment for a specified period • IPMT(rate,per,nper,pv,fv,type)

  13. Arguments to PPMT and IPMT

  14. Calculating Prin. and INT. Between Periods • CUMIPMT function • Automatically calculates interest values between two periods • CUMIPMT(rate,nper,pv,start_period,end_period,type) • CUMPRINC function • Automatically calculates principal values between two periods • CUMPRINC(rate,nper,pv,start_period, end_period,type)

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