Microsoft Office Tutorials and References

In Depth Information

**Figuring Loan Calculations**

Figure 5-3:

Customizing

how

numeric

values are

handled.

Figuring Loan Calculations

Loans are part of almost everyone’s life. At the personal level, you may need

to deal with car loans, education loans, and a home mortgage. From a

business perspective, companies from the smallest to the largest often use loans

to fund new equipment, expansion, and so on. No matter what kind of loan

you need, Excel has the tools that permit you to evaluate loans and calculate

specific details.

Most loans have the following five factors:

✓
Loan principal:
The amount you’re borrowing. For example if you’re

interested in a loan for $5,000, then the loan principal
is $5,000.

✓
Interest rate:
The cost to borrow the principal. This is how lenders

make money. The interest rate is a fee, so to speak, that a borrower pays

to a lender. Usually, but not always, the interest rate is expressed as a

percent per year.