Formulas and Functions

Table Of Contents

Chapter 13 Additional Examples and Topics 349

Function and its purpose Arguments used by the function

“PV” (page 141) is the function to use if you wish

to determine the present value (what it is worth

today) of a series of cash ows, considering the

other factors such as the interest rate. It solves for

the argument present-value.

periodic-rate, num-periods, payment, future-value,

when-due

“RATE” (page 14 4) is the function to use if you

wish to determine the periodic interest rate for a

loan or annuity, based on the other factors such

as the number of periods in the loan or annuity. It

solves for the argument periodic-rate.

num-periods, payment, present-value, future-value,

when-due, estimate

As illustrated by this table, these TVM functions each solve for, and return the value

of, one of the ve primary arguments when the problem being solved involves

regular periodic cash ows and xed interest rates. In addition, “IPMT” (page 12 3 ) and

“PPMT” (page 13 5 ) can solve for the interest and principal components of a particular

loan or annuity payment, and “CUMIPMT” (page 110 ) and “CUMPRINC” (page 11 2 ) can

solve for the interest and principal components of a consecutive series of loan or

annuity payments.