Microsoft Office Tutorials and References
In Depth Information
Similar Excel Functions
FIGURE 31.1 The Car Loan Model
FIGURE 31.2 The Payment Function Menu
fv is defined as
. . . the future value, or a cash balance you want to attain after
the last payment is made.
This is what we call a balloon payment, it is a
large, lump sum payment made at the end of a long-term balloon loan.
Balloon payments are most commonly found in mortgages, but could also
be attached to auto and personal loans as well. If the FV field is not filled, it
is assumed to be 0 (zero)
meaning that the future value of the loan after
the last payment is made will be 0. If the FV is not 0, make sure that you add
(minus) sign in front of the number value. For example: PMT (0.5%,
type indicates when payments are due and is either the number 0 or 1. When type
is omitted, it is assumed to be 0, which means that the payments are made at
the end of the period. When the type is 1, it is assumed that the payments are
due at the beginning of the period, as is the case in some mortgage situations.
SIMILAR EXCEL FUNCTIONS
Present Value is the total amount that a series of future payments or cash flows
is worth today, given a specified rate of return. If you are offered an investment
that will pay you $500 per month for the next 10 years, and if you could earn a rate