Microsoft Office Tutorials and References
In Depth Information
PV
PRICEMAT is calculated as follows:
Figure 6.31
Returns the value of
a security that pays
interest at maturity
and price per $100
face value by using the
PRICEMAT function.
A
The function
built with cell
referencing
PV
Based on an investment, PV returns the present value.
=PV(rate,nper,pmt,fv,type)
The PV function returns the present value of an investment. For example, on a car loan, the
present value is the amount of the loan to the lender. Figure 6.32 presents a PV example. If
you can afford monthly payments of $500 a month, and can get a loan for 5.8%, what amount
could you afford on a 3-year loan? The formula =PV(C9/12,D9*12,E9) would result in a total
loan amount over 3 years of $$16,485.
The interest rate of the loan. If the annual interest rate is 6% and you make
monthly payments, the interest rate is 6%/12 =.50%.
RATE
The number of total payments—12 months per year at 2 years would be 12*2 =24.
NPER
The payment made each period. It must remain constant. Typically, it includes
principal and interest.
PMT
The future value or cash balance you want to attain upon the last payment. For
a loan it would be zero. For a future amount you want to attain with payments,
it would be the total goal amount.
FV
The payment timing—when the payments are due.
TYPE
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