Member Name

1 Future value
Doan
2 Present value
3 Net present value
Lan Vy
4 Principal Part of the Payment
5 Number of period required for loan or investment
Nhật Linh
6 Effective rate
7 Nominal
Hà Anh
8 _x0008_Rate
9 Periodic payment for a loan
Thu Trang
10 The principal portion of a loan payment in a given period
Formula Example
FV (rate, nper, pmt, [pv], [type]) 5.1-13
PV (rate, nper, pmt, [fv], [type]) 5.2-3
NPV (rate,value1,[value2],...) 19, 20(P.217)
PPMT 5c, 6c (P.231)
NPER (Rate, PMT, PV, [FV], [Type]) 5.5-17
EFFECT 5.1-7
NOMINAL(effect_rate, npery) 5.1.22 (p213)
RATE( nper, pmt, pv, [fv], [type], [guess])
IPMT(rate, per, nper, pv, [fv], [type])
PMT (rate, nper, pv, [fv], [type]) 13 ( p220) , 19(p231)
5 (p235)
 1. FU
If you want to find out the future value of a particular inves

FV(rate, nper, pmt, [pv], [type])

Rate = It is the interest rate/period

Nper = Number of periods
[Pmt] = Payment/period
PV = Present Value
[Type] = When the payment is made (if nothing is mentioned, it’s assumed that the payment has been made at the

Problem 5.1-13 A $6000 certificate of deposit is purchased for $6000 and is held
what is it worth at the end of

Rate 8%
Nper 7 Future value=$10,282.95
[Pmt] 0
PV -6000
 1. FUTURE VALUE (FV FUNCTION)
re value of a particular investment which has a constant interest rate and periodic payment, use the following formula –

type])

ment has been made at the end of the period)

rchased for $6000 and is held for seven years. If the certificate earns an efective rate of 8%,
what is it worth at the end of that period?
following formula –
 2. PR

PV(rate, nper, pmt, [fv], [type])

Rate = It is the interest rate/period

Nper = Number of periods
[Pmt] = Payment/period
FV = Future Value
[Type] = When the payment is made (if nothing is mentioned, it’s assumed that the payment has been made at the

Problem 5.2-3: $4000 due in 12 years at 7% c

Rate 3.50%
Nper 24 Present value$1,751.83
[Pmt] 0
FV -4000
 2. PRESENT VALUE (PV FUNCTION)

type])

ment has been made at the end of the period)

$4000 due in 12 years at 7% compounded semiannually.

 Calculates the net present value of an investment by NET PRESENT
using a discountVALUE
rate and a series of future
a. Description: values).
b. Syntax: NPER(rate,pmt,pv,[fv],[type])
c. Generic formula: = NPV(rate,value1,[value2],...) - initialcost
d. Arguments:
rate required discount rate over one period
value1 required first value(s) representing cash flows
value2 optional second value(s) representing cash flows
e. Examples:
5.2.19. (P.217)
rate 4.06% Net present value: $9,669.40
value1 0
value2 0
value3 0
value4 0
value5 $13,000
value6 $14,000
value7 $15,000
value8 $16,000
initial cost $35,000
5.2.20. (P.217)
rate 6.09% Net present value: $4,379.98
value1 0
value2 0
value3 0
value4 0
value5 $13,000
value6 $14,000
value7 $15,000
value8 $16,000
initial cost $35,000
tVALUE
rate and a series of future payments (negative values) and income (positive
values).
 Returns the payment on the principal forPRINCIPAL PART
a given period for anOF THE PAYMENT
investment based on periodic, const
a. Description rate.
b. Syntax: PPMT(rate, per, nper, pv, [fv], [type])
c. Arguments:
rate required the interest rate per period
per required specifies the period and must be in the range 1 to nper.
nper required the total number of payment periods in an annuity.
pv required the
Thepresent value or
future value, —athe total
cash amountyou
balance that a series
want of future
to attain payments
after the is worthisnow
last payment
fv optional made.
If fv is omitted, it is assumed to be 0 (zero), that is, the future value of a loan is 0.
type optional the number 0 or 1 and indicates when payments are due.

Set type equal to If payments are due

0 or omitted at
at the
the end of the period
beginning of the
1 period

d. Examples:
5.5.5c (P.231)
rate 4.07%
per 1
nper 36
pv $7,500
The principal repaid in the first payment -$95.17

5.5.6c (P.231)
rate 7.44%
per 1
nper 48
pv $65,000
The principal repaid in the first payment -$159.32
HE PAYMENT
stment based on periodic, constant payments and a constant interest

nper.

of future
tain payments
after the is worthisnow.
last payment

the future value of a loan is 0.

re due.
 Number of periods (NPER)
The NPER function is a financial function that returns the number of periods for loan or investment, given the amou

NPER = (Rate, PMT, PV, [FV], [Type])

Rate: Interest rate per period

PMT: Amount paid per period
PV: Present value
[FV] = An optional argument which is about the future value of a loan (if nothing is mentioned, FV is considered as “0”)
[Type] = When the payment is made (if nothing is mentioned, it’s assumed that the payment has been made at the end of the p
Example: A person purchases furniture for 2000 dollars and agrees to pay off this amount by monthly paym
rate of 18% compounded monthly, how many full payments will there be?

Rate 18% (compounded monthly)

PMT -100
Loan amount 2000
Period(s) in month 23.96
 (NPER)
stment, given the amount, the interest rate, and periodic payment amount.

considered as “0”)
en made at the end of the period)
mount by monthly payments of 100 dollars. If interest is charged at the
EFFECT
To find out the effective annual interest rate

EFFECT = (Nominal_Rate, NPERY)

Nominal_Rate: Nominal interest rate

NPERY: Number of compounding periods per year

Example: Find the effective rate of interest that is equivalent to a nominal rate of 10% compounded
Period(s) Effective rate
a) Yearly 1 10.00%
b) Semiannually 2 10.25%
c) Quarterly 4 10.38%
d) Monthly 12 10.47%
e) Daily 365 10.52%
10% compounded
 NOMI
Description When we have an effective annual rate and the number of compounding periods per year, we can calculate
NOMINAL= (effect_rate, npery)
Effect_Rate = Effective annual interest rate
NPERY = Number of compounding per year
Example: What nominal rate of interest, compounded monthly, corresponds to an effective rate of 4.5%?
_x0008_Effect_r 4.50%
npery 12 NOMINAL 0.04409771281
 NOMINAL
eriods per year, we can calculate the NOMINAL rate for the year. Let’s have a look at how to do it in excel

an effective rate of 4.5%?

 RATE
Description we can calculate the interest rate needed to pay off the loan in full for a given period of time. Let’s have a loo
RATE( nper, pmt, pv, [fv], [type], [guess])
Nper = Number of periods
PMT = Amount paid per period
PV = Present Value
[FV] = An optional argument which is about the future value of a loan (if nothing is mention
[Type] = When the payment is made (if nothing is mentioned, it’s assumed that the paymen
[Guess] = An assumption of what you think RATE should be
Example 5,000 repaid by four equal yearly payments with interest at 7% compounded annually

npery 4
pmt 5,000
period of time. Let’s have a look at how to calculate RATE financial function in excel

(if nothing is mentioned, FV is considered as “0”)

umed that the payment has been made at the end of the period)

unded annually
 9. The periodic payment for a loan
a) Discription: to calculate the payment for a loan based on constant payments and a constant interest rate.
b) Syntax
PMT (rate, nper, pv, [fv], [type])
c) Arguments
Rate Required The interest rate for the loan
Nper Required The total number of payments for the loan
Pv Required The present value, or the total amount that a series of future payments is worth no
Fv Optional The future value, or a cash balance you want to attain after the last pay
Type Optional The number 0 (at the end of the period) or 1 (At the beginning of the per
d) Example
A debtor is to amortize an $18,000 car loan by making equal repayments at the end of each month for 36 months. I

Rate 5.00%
Nper 36 Monly payment = -$1,087.82
Pv 18,000
 a loan
onstant interest rate.

uture payments is worth now; also known as the principal

ttain after the last payment is made. If fv is omitted, it is assumed to be 0 (zero), that is, the
the beginning of the period) and indicates when payments are due.

ach month for 36 months. If the interest is at 5% compounded monthly. What is each monthly repayment
ment
 10. The principal portion of a loan payment in a given period
a) Description
IPMT(rate,
Returns theper, nper,payment
interest pv, [fv], [type])
for a given period for an investment based on periodic, constant payments and a cons
b) Syntax

c) Arguments
Rate Required The interest rate for the loan
Per Required The period for which you want to find the interest and must be in
Nper Required The total number of payments for the loan
Pv Required The present value, or the total amount that a series of future payments is
Fv Optional The future value, or a cash balance you want to attain after the
Type Optional The number 0 (at the end of the period) or 1 (At the beginning of
d) Example
Problem 5.5 - 5 b) - p235
Rate 4%
Per 1 The interest in the first payment =
Nper 36
Pv 7,500
ment in a given period

constant payments and a constant interest rate.

the interest and must be in the range 1 to nper

oan
a series of future payments is worth now; also known as the principal
u want to attain after the last payment is made. If fv is omitted, it is assumed to be 0 (zero), that is, the fu
) or 1 (At the beginning of the period) and indicates when payments are due.

-$300.00
0 (zero), that is, the fu