In This Chapter
Understanding how the basic financial functions work
Using the basic investment accumulation, discounting, and amortization functions
Using the program's depreciation functions
As the old song says, "Money makes the world go round." To that end, Excel supplies you with plenty of built-in functions for getting the latest spin on how much you're making and spending. In this chapter, you get the chance to practice using some of the basic investment, depreciation, and currency conversion functions that make up a part of the program's financial group.
Excel offers a fair number of sophisticated financial functions for determining such things as the present, future, or net present value of an investment; the payment, number of periods, or the principal or interest part of a payment on an amortized loan; the rate of return on an investment; and the depreciation of your favorite assets.
The key to using many of Excel's financial functions is in understanding the terminology used by their arguments. Many of the most common financial functions such as PV (Present Value), NPV (Net Present Value), FV (Future Value), and PMT (Payment) take similar arguments:
Pv is the present value that is the principal amount of the annuity.
Fv is the future value that represents the principal plus interest on the annuity.
Pmt is the payment made each period in the annuity. Normally, the payment is set over the life of the annuity ...