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

a

—

(minus) sign in front of the number value. For example:
PMT
(0.5%,

5000
).

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.

48,

20000,

−

SIMILAR EXCEL FUNCTIONS

PV

Present Value

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

—