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Advanced Functions

The document explains various financial and statistical functions used in Excel, including Terminal Value (TMT), PMT, PPMT, IPMT, MIRR, VLOOKUP, HLOOKUP, P-Value, and F-Value. Each function serves specific purposes such as calculating loan payments, performing data lookups, and conducting hypothesis testing. The summary highlights the importance of these functions in financial analysis and statistical evaluations.

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3 views

Advanced Functions

The document explains various financial and statistical functions used in Excel, including Terminal Value (TMT), PMT, PPMT, IPMT, MIRR, VLOOKUP, HLOOKUP, P-Value, and F-Value. Each function serves specific purposes such as calculating loan payments, performing data lookups, and conducting hypothesis testing. The summary highlights the importance of these functions in financial analysis and statistical evaluations.

Uploaded by

agarwalsrishti.9771
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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1.

TMT (Terminal Value)

The TMT function isn’t a standard Excel function, but "TMT" often refers to Terminal
Value in finance. Terminal Value is used in Discounted Cash Flow (DCF) analysis to
calculate the value of a business beyond a forecast period.

Formula for Terminal Value (TMT) Calculation:

You can calculate the Terminal Value (TV) using either the Perpetuity Growth Model or
the Exit Multiple Method.

• Perpetuity Growth Method (Gordon Growth Model): TV=FCF×(1+g)(r−g)TV =


\frac{FCF \times (1 + g)}{(r - g)} Where:
o FCFFCF = Free Cash Flow in the final year of projection
o gg = Growth rate in perpetuity
o rr = Discount rate (WACC)

In Excel, this might look like:

=FCF * (1 + GrowthRate) / (DiscountRate - GrowthRate)

2. PMT (Payment) Function

As already covered, the PMT function calculates the payment for a loan or investment based
on constant payments and a constant interest rate.

Syntax:

=PMT(rate, nper, pv, [fv], [type])

Where:

• rate = interest rate per period


• nper = number of payment periods
• pv = present value or principal
• fv = future value (optional, default is 0)
• type = payment timing (0 = end of period, 1 = beginning)

3. PPMT (Principal Payment) Function

The PPMT function calculates the principal portion of a payment for a specific period in an
amortizing loan.

Syntax:

=PPMT(rate, per, nper, pv, [fv], [type])


Where:

• rate = interest rate per period


• per = the specific period for which to calculate the principal portion
• nper = total number of periods
• pv = present value or loan amount

Example: To calculate the principal portion of the 3rd payment of a loan:

=PPMT(5%/12, 3, 5*12, -10000)

4. MPB (Modified Internal Rate of Return)

The MPB (Modified Internal Rate of Return, or MIRR) isn't a standard function in Excel, but
the MIRR function in Excel calculates the modified internal rate of return for a series of cash
flows, considering reinvestment rates and financing rates.

Formula for MIRR:

=MIRR(values, finance_rate, reinvest_rate)

Where:

• values = array of cash flows (negative for outflows, positive for inflows)
• finance_rate = the rate at which the company borrows money
• reinvest_rate = the rate at which the company reinvests earnings

5. IMR (Interest Rate)

The IMR function isn't a standard Excel function either, but if you are looking for interest
rates (like for loans or investments), you may be thinking of the RATE function, which
calculates the interest rate for a given set of loan terms.

Syntax:

=RATE(nper, pmt, pv, [fv], [type], [guess])

Where:

• nper = number of periods


• pmt = payment amount per period
• pv = present value or loan amount
• fv = future value (optional)
• type = when payments are due (0 = end, 1 = beginning)
• guess = your guess for the interest rate (optional)
6. VLOOKUP (Vertical Lookup)

The VLOOKUP function searches for a value in the first column of a table and returns a
value in the same row from a specified column.

Syntax:

=VLOOKUP(lookup_value, table_array, col_index_num, [range_lookup])

Where:

• lookup_value = the value to search for


• table_array = the range of cells that contains the data
• col_index_num = the column number in the table from which to retrieve the value
• range_lookup = TRUE for approximate match, FALSE for an exact match

Example:

=VLOOKUP("Apple", A2:C10, 2, FALSE)

This searches for "Apple" in the first column and returns the value from the second column.

7. HLOOKUP (Horizontal Lookup)

Similar to VLOOKUP, but HLOOKUP searches for a value in the first row of a table and
returns a value from a specified row.

Syntax:

=HLOOKUP(lookup_value, table_array, row_index_num, [range_lookup])

Where:

• lookup_value = the value to search for


• table_array = the range of cells containing the data
• row_index_num = the row number from which to return a value
• range_lookup = TRUE for approximate match, FALSE for exact match

Example:

=HLOOKUP("Sales", A1:E5, 3, FALSE)

This searches for "Sales" in the first row and returns the value from the third row.

8. P-Value (Statistical Function)


The P-Value is used in statistical hypothesis testing to determine the significance of the
results.

To calculate the P-value in Excel, you can use the T.TEST function for hypothesis testing
with a t-distribution.

Syntax:

=T.TEST(array1, array2, tails, type)

Where:

• array1 and array2 = the two data sets you're comparing


• tails = 1 (one-tailed) or 2 (two-tailed)
• type = 1 (paired), 2 (two-sample equal variance), or 3 (two-sample unequal variance)

Example:

=T.TEST(A1:A10, B1:B10, 2, 3)

This returns the P-value for the two-sample unequal variance test.

9. F-Value (F-Statistic)

The F-Statistic is used in analysis of variance (ANOVA). Excel can calculate the F-value
using the F.TEST function.

Syntax:

=F.TEST(array1, array2)

Where:

• array1 and array2 = the two sets of data you're comparing.

This will return the F-statistic used to assess whether the variances of the two samples are
significantly different.

10. IPMT (Interest Payment) Function

The IPMT function calculates the interest portion of a specific payment on a loan, given the
interest rate, number of periods, and loan amount.

Syntax:

=IPMT(rate, per, nper, pv, [fv], [type])


Where:

• rate = interest rate for each period


• per = the period for which you want to calculate the interest payment
• nper = total number of periods
• pv = present value or loan amount
• fv = future value (optional)
• type = when payments are due (optional)

Example:

=IPMT(5%/12, 3, 5*12, -10000)

This will return the interest portion of the 3rd payment on a $10,000 loan with a 5% annual
interest rate over 5 years (monthly payments).

Summary:

• TMT typically refers to Terminal Value, but is not an Excel function.


• PMT, PPMT, IPMT are used to calculate loan payments, principal payments, and
interest payments.
• MIRR is used for calculating the Modified Internal Rate of Return.
• VLOOKUP and HLOOKUP are lookup functions for vertical and horizontal
searches.
• P-Value and F-Value are statistical functions to test hypotheses and variances.

Each of these functions has its own use case, especially in financial analysis, statistical
analysis, and data lookups.

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