Chapter 4

Financial Formulas


check Using basic investment functions

check Using basic depreciation functions

check Using basic currency conversion functions

Money! There’s nothing quite like it. You can’t live with it, and you certainly can’t live without it. Many of the spreadsheets that you work with exist only to let you know how much of it you can expect to come in or to pay out. Excel contains 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; or the depreciation of your favorite assets.

By activating the Analysis ToolPak add-in, you add more than 30 specialized financial functions that run the gamut from those that calculate the accrued interest for a security paying interest periodically and only at maturity, all the way to those that calculate the internal rate of return and the net present value for a schedule of nonperiodic cash flows.

Financial Functions 101

The key to using any of Excel’s financial functions is to understand the terminology ...

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