June 2004
Beginner
504 pages
15h 36m
English
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Compare Returns for Alternative Investments
Converting different types of investment into the same form of compound-interest problem makes comparisons easy.
Financial calculations all revolve around the same set of parameters: present value, future value, interest or return rate, number of periods, and payment. With any four of these parameters, you can solve for the fifth, which means that with a few qualifications you can turn any type of investment into an apple and then compare all the apples to see which one is the best for your situation. To make the most meaningful comparisons with investments, the number of periods and the payment must be the same for each alternative.
Whether you calculate financial measures by hand or use a
spreadsheet, the parameters are the same. If you use Excel for
finance, the IRR (internal rate of return),
XIRR (internal rate of return for irregular cash
flows), PV (present value), FV
(future value),and PMT (payment) functions all use
or solve for the following parameters in one form or another:
- Rate
The interest or investment rate per period. For example, if you are evaluating the annual growth for a stock, the rate is the growth for one year.
- Nper
The total number of payment periods in an annuity. If you are evaluating the annual growth of a stock that you held for five years, Nper is 5.
- PV
The cash value at the beginning of the evaluation period.
- Pmt
The payment made each period, which must remain the same for each period. IRR and XIRR use an array of ...
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O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.Julian F.
I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.Addison B.
I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.Amir M.
I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.