Microsoft Office Tutorials and References
In Depth Information
The Basic Excel Financial Functions
Calculating periods
The NPER function is used to determine how many payments are necessary to pay off a loan, or
to fund an account a certain amount. Its syntax is
NPER(rate, pmt, pv, fv, type)
Years until retirement
If you know how much money you need to retire and you’re making regular payments to a
retirement account, you can use the NPER function to determine the age at which you can retire.
Assume you’ll need $500,000 to retire, and you’re contributing $100 per month. Further assume
that your retirement account has a balance of $350,000. This formula returns the number of
years until you can retire:
=NPER(10%/12,–100,–350000,500000,0)
Assuming you can earn 10% on your investments, NPER returns 41.8 months (or 3.5 years). You
can combine NPER and PV if you know how much you need to live on each week, as in this
formula:
=NPER(10%/12,–100,–350000,PV(.1/52,20*52,–1000,0,0),0)
The PV function used in the fv arguments assumes that you’ll make 10% (converted to weeks),
that you’ll need to withdraw money for 20 years (converted to weeks), that you’ll need $1,000
per week, and that there will be nothing left. If you can live on $1,000 per week, you can retire in
2.4 years.
The two formulas in this section are shown in Figure 11-12.
Figure 11-12: Using the PERIOD function for retirement calculations.
 
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