Chapter 26. Time Value of Money

In this chapter we will develop several models for time value of money problems using VBA. These models are important because time value of money problems are probably the most common type of problems in finance. But the models in this chapter are important for another reason. The early ones are designed to provide a practical introduction to the most common aspects of VBA. I use them to demonstrate how you utilize many of the features of VBA we discussed earlier to write procedures and create actual models.

I have already discussed the underlying theory and concepts for time value of money problems in the parallel chapter in the Excel part of the book. Chapter 14: Time Value of Money. If you have not covered that chapter yet, you may want to do so before tackling this one. The only new concept 1 discuss here is the concept of iteration.

Review of Theory and Concepts

Review of Theory and Concepts

A good part of the power of any programming language derives from its ability to solve problems using the method of iteration. It is therefore important to learn both the concept of iteration and how to apply it to solve practical problems.

SOLVING PROBLEMS BY ITERATION

Solving a problem by iteration means solving it by systematic trial and error. There are many problems in finance for which it is not possible to write the variable we want to calculate explicitly in terms of the other variables of the problem, even though we know the relationships among them. In ...

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