Excel_Financial_Functions_Brainscape Flashcards
(11 cards)
In Excel, what does type = 0 mean in financial functions?
Payments are made at the end of the period (ordinary annuity).
Example: Monthly loan payments.
In Excel, what does type = 1 mean in financial functions?
Payments are made at the beginning of the period (annuity due).
Example: Rent or tuition paid at the start of each month.
What are the key variables for time-value-of-money functions in Excel?
rate: interest per period, nper: number of periods, pmt: payment per period, pv: present value, fv: future value, type: 0 = end, 1 = beginning.
When using Excel’s FV or PV, should PMT be positive or negative?
PMT should be negative if you’re paying (e.g., saving or loan payment), and positive if you’re receiving money.
What does =NPV(rate, values) compute in Excel?
The present value of future cash flows discounted at a given rate. Do not include the initial investment in the values.
How do you include an initial investment in Excel NPV?
Manually subtract it: =NPV(rate, cash_flows) - initial_investment.
What does =IRR(values) return in Excel?
The internal rate of return that makes NPV = 0 for a series of cash flows.
Example: =IRR({-2000, 1000, 500, 1500}) ≈ 24.89%.
How do you find the interest rate needed to reach a future value in Excel?
Use =RATE(nper, pmt, pv, fv, type). Multiply by 12 if you want annual APR.
How do you find the number of periods needed to reach a goal in Excel?
Use =NPER(rate, pmt, pv, fv, type). It returns how many periods are needed based on inputs.
How do you calculate a monthly mortgage payment in Excel?
Use =PMT(rate, nper, pv).
Example: =PMT(0.06/12, 360, -400000) returns ≈ $2,398.20.
What does a negative PV or PMT mean in Excel functions?
It indicates cash outflow — money you pay or invest.
Example: A savings contribution should be entered as –500.
