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Excel Spreadsheets Financial Functions (53)

In annex 4 you have found a description of all 53 Excel functions in the "Financial" category. Below is the list of the 4 most useful ones.

Functions What it Does
FV Returns the future value of an investment
NPER Returns the number of periods for an investment
PMT Returns the periodic payment for an annuity
RATE Returns the interest rate per period of an annuity

If you are using a version of Excel earlier than 2007 you need to activate the "Excel Analysis Toolpack" to make some of the functions above available.


The RATE Function

The question to which RATE  brings an answer to is:
- What is the real interest rate if they ask me for a certain amount each period to pay a loan?

 

A

Descriptions

1

48

Number of periods (years, months, weeks..etc)

2

$550

Periodic payment

3

$24,000

Total amount of loan

4

0

The balance left to pay at the end of the period. If you omit this argument Excel uses "0".

5

0

Payment made at the beginning of the period (1) or at the end of the period (0). If you omit this argument Excel uses "0" saying that the payment is made at the end of each period which is usually the reality when you borrow money.

6

5.00%

The result with the formula using the RATE function.
Note: the format of this cell must be "Percentage" with any number of decimals. In this example the number of decimals is 2

Here is the formula in cell A6:
=RATE(A1,-A2,A3,A4,A5)*12

Notes on the formula: The payment argument is negative (-A2); If you use months as periods and you want an annual rate you multiply by 12, if you use a years as periods and you want an annual rate you don't multiply......; If you don't use the "Percentage" format in cell A6 the result of this example will be 0.05; The formula could also be =RATE(A1,-A2,A3)*12 the arguments in A4 and A5 being optional


The PMT Function

The question to which PMT brings an answer to is:
- If I borrow a certain amount of money and I want it repaid at the end of a certain period of time what will be the periodic payment?

 

A

Descriptions

1

5.00%

The annual interest rate.
Note: the format of this cell must be "Percentage" with any number of decimals. In this example the number of decimals is 2

2

48

Number of periodic payments (years, months, weeks)

3

$24,000

Total amount of loan

4

0

The balance left to pay at the end of the period. If you omit this argument Excel uses "0".

5

0

Payment made at the beginning of the period (1) or at the end of the period (0). If you omit this argument Excel uses "0" saying that the payment is made at the end of each period which is usually the reality when you borrow money.

6

-$550.41

The result with the formula using the PMT function.

Here is the formula in cell A6:
=PMT(A1/12,A2,A3,A4,A5)

Notes on the formula: If you don't use the "Percentage" format in cell A1 enter 0.05; If you use months as periods the rate must be divided by 12 (A1/12), if you use weeks then you divide by 52 (A1/52), if there are 4 payments per year you will divide the rate by 4 (A1/4)and if the payment is annual you don't divide the rate argument (A1) ; The formula could also be =PMT(A1/12,A2,A3) the arguments in A4 and A5 being optional; If you want the payment to show as a positive value add a minus sign before the equal sign (=-PMT(A1/12,A2,A3,A4,A5))


The FV Function (Future value)

The question to which FV  brings an answer to is:
- If I put a certain amount of money in the bank each month how much money will I have saved at the end of a certain period of time?

 

A

Descriptions

1

5.00%

The annual interest rate.
Note: the format of this cell must be "Percentage" with any number of decimals. In this example the number of decimals is 2

2

48

Number of periodic deposits (years, months, weeks)

3

$550

Amount of periodic deposits

4

$0

Beginning balance. If you omit this argument Excel uses "0".

5

1

Deposits made at the beginning of the period (1) or at the end (0). If you omit this argument Excel uses "0". In the case of the FV function make sure that you enter "1".

6

-$29,279.68

The result with the formula using the FV function.

Here is the formula in cell A6:
=FV(A1/12,A2,A3,A4,A5)

Notes on the formula: If you don't use the "Percentage" format in cell A1 enter 0.05; If you use months as periods the rate must be divided by 12 (A1/12), if you use weeks then you divide by 52 (A1/52), if there are 4 payments per year you will divide the rate by 4 (A1/4)and if the payment is annual you don't divide the rate argument (A1) ; The formula could also be =FV(A1/12,A2,A3) the arguments in A4 and A5 being optional; If you want the RESULT to show as a positive value add a minus sign before the equal sign (=-FV(A1/12,A2,A3,A4,A5))


The NPER Function

The question to which NPER  brings an answer to is:
- How many months would it take me to repay a certain loan at a certain interest rate if I pay a certain amount each month?

 

A

Descriptions

1

5.0%

The annual interest rate.
Note: the format of this cell must be "Percentage" with any number of decimals. In this example the number of decimals is 2

2

$550

Periodic payment

3

$24,000

Total amount of loan

4

0

The balance left to pay at the end of the period. If you omit this argument Excel uses "0".

5

0

Payment made at the beginning of the period (1) or at the end (0). If you omit this argument Excel uses "0".

6

48.26

The result with the formula using the NPER function.

Here is the formula in cell A6:
=NPER(D1/12,-D2,D3,D4,D5)

Notes on the formula: If you don't use the "Percentage" format in cell A1 enter 0.05; The second argument MUST BE NEGATIVE; If you use months as periods the rate must be divided by 12 (A1/12), if you use weeks then you divide by 52 (A1/52), if there are 4 payments per year you will divide the rate by 4 (A1/4)and if the payment is annual you don't divide the rate argument (A1) ; The formula could also be =NPER(A1/12,A2,A3) the arguments in A4 and A5 being optional;


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SUMPRODUCT    INDEX/MATCH    SUBTOTAL    ISERROR    HLOOKUP    LOOKUP    VLOOKUP
AVERAGEIF    AVERAGEIFS   COUNTIF    COUNTIFS    SUMIF    SUMIFS    IFERROR