Excel Financial Functions

The excel financial functions have been made available to execute a variety of financial calculations, including calculations of yield, investment valuations, interest rates, internal rate of return, asset depreciation, and payments. These financial functions can be, however, classified into different categories so as to enable you to stumble on the required function.

The Four Interrelated Quantities

There are generally four interrelated quantities that include:

1. Present Value (PV) equivalent to the value of the load or savings today. This function is used to estimate the loan size that could be paid off provided a periodic payment over a provided total number of payments and a provided periodic interest rate.

2. Interest Rate per period (RATE) equivalent to the interest rate, generally monthly. This function is used to calculate the periodic interest rate required to pay off a provided present value with a provided periodic payment and a total number of payments.

3. Number of payment periods (NPER) equivalent to number of payment periods. This function is used to evaluate the total number of payment periods required to pay off a given present value with a provided payment and periodic interest rate.

4. Periodic payment (PMT) equivalent to the payment per period. This function is used for calculating the fixed periodic payment with a given present value, periodic interest rate, and the total number of payments.

If any three of the aforesaid quantities are provided, the fourth one can be calculated easily.