Financial Functions

FV, one of the financial functions, calculates the future value of an investment based
rate.

For example, if you deposit an amount of $500.00 for 5 years at the rate of interest provided
at 5%, then we will calculate the future value that it will receive at the end of the 5th year in
the following manner.
Rate 5%

Years Opening Balance Deposited Amount Interest Closing Balance

1 ₹ - ₹ 500.00
2 ₹ 500.00
3 ₹ 500.00
4 ₹ 500.00
5 ₹ 500.00

Future Value =FV(rate,nper,pmt,[pv],[type]

Result ($2,762.82)
nvestment based on a constant interest

FV(rate,nper,pmt,[pv],[type])
Rate Required. The interest rate per period.
Nper Required. The total number of payment periods in an annuity.
Pmt Required. The payment made each period; it cannot change over the life of the annuity. Typically, pmt
contains principal and interest but no other fees or taxes. If pmt is omitted, you must include the pv argument.

Pv Optional. The present value, or the lump-sum amount that a series of future payments is worth right now. If pv
is omitted, it is assumed to be 0 (zero), and you must include the pmt argument.

type – is the number 0 or 1 and indicates when payments are due. If the type is omitted, it is assumed to be 0. The 0 types are
used when payments are due at the end of the period and 1 at the beginning.
nuity. Typically, pmt
ude the pv argument.

ts is worth right now. If pv

med to be 0. The 0 types are

Input Values Description
6% annual interest rate (rate)
6 number of payments (nper)
500 amount of the payment (pmt)
1000 present value (pv)
1 payment is due at the beginning of the period (type)

Formula Description
Future Value
($5,115.44)
 RD Amount 1000 Premium 10000
Rate of Interest 8% Rate of Interest 8%
Time (months) 24 Time (Year) 20
Future Value Future Value
 NPV calculates the net present value of an investment by using a
discount rate and a series of future payments (negative values) and
income (positive values).
Project
Discount Rate 10%

Period Cash Flow

0 -1000
1 1500
2 2000
3 2500
4 2700

Net Present Value $5,217.23

 Data Description
10% Annual discount rate
-10000 Initial cost of investment one year from today
3000 Return from first year
4200 Return from second year
6800 Return from third year
Formula Description
Net present value of this investment
 Principal Amount 1000
8%
Interest Rates 10%
11%
Future value of 1000 with compound annual
interest rates of 8%, 10% and 11% 1318.68
Description
Future value of 1 with compound annual interest rates of 9%, 11%, and 10%.
 Principal Amount 1
9%
Schedule 11%
10%
FV Schedule
 PMT calculates the payment for a loan based on constant payments and a constant interest rate i.e. EMI

Calculate the monthly payment for a $10,000 loan with an annual interest rate of 5% and a
term of 3 years (36 months).

Loan Amount ₹ 10,000

Annual Intrest rate 5%
Term (Months) 36
PMT (EMI) ₹ -604.34
st rate i.e. EMI

rate of 5% and a
 Determine how much you need to save each month to reach a savings goal of $50,000 in 5 year
assuming an annual interest rate of 4%.

Saving Goal $ 50,000

Annual Intrest rate 4%
Term (Years) 5
PMT ₹ -754.16
al of $50,000 in 5 years,
 The IPMT function in Excel is used to calculate the interest portion of a loan or investment payment for a specific
period within the loan or investment term. This function is useful when you want to know how much of your
payment is going toward interest for a particular month or period.

Ram has a $10,000 loan with an annual interest rate of 5%, and a term of 3 years (36
months), and he wants to calculate the interest payment for the first month (month 1).

Loan Amount ₹ 10,000

Annual Intrest rate 5%
Term (Months) 36
IPMT ₹ -41.67
yment for a specific
ow much of your

of 3 years (36 =IPMT(rate, per, nper, pv, [fv], [type])

nth (month 1).
rate: The interest rate per period.
per: The period for which you want to calculate the interest (e.g., month 1, month 2, etc.).
nper: The total number of payment periods.
pv: The present value or principal amount (initial loan amount or investment).
[fv] (optional): The future value or a cash balance you want to attain after the last payment is m
[type] (optional): Indicates whether payments are due at the beginning or end of the period. Us
nth 1, month 2, etc.).

after the last payment is made. If omitted, it is assumed to be 0.

ing or end of the period. Use 0 for end of the period (default) or 1 for the beginning of the period.
 The IPMT function in Excel is used to calculate the interest portion of a loan or investment payment for a specific
period within the loan or investment term. This function is useful when you want to know how much of your
payment is going toward interest for a particular month or period.

You have an investment of $50,000 that earns an annual interest rate of 6%, and you want
to calculate the interest earned for the first quarter (3 months).

Investment Amount ₹ 50,000

Annual Intrest rate 6%
Term (Quarters) 4
IPMT
yment for a specific
ow much of your

%, and you want =IPMT(rate, per, nper, pv, [fv], [type])

s).
rate: The interest rate per period.
per: The period for which you want to calculate the interest (e.g., month 1, month 2, etc.).
nper: The total number of payment periods.
pv: The present value or principal amount (initial loan amount or investment).
[fv] (optional): The future value or a cash balance you want to attain after the last payment is m
[type] (optional): Indicates whether payments are due at the beginning or end of the period. Us
nth 1, month 2, etc.).

after the last payment is made. If omitted, it is assumed to be 0.

ing or end of the period. Use 0 for end of the period (default) or 1 for the beginning of the period.
 The PPMT function in Excel is used to calculate the principal portion of a loan or investment payment for a specific
period within the loan or investment term. It helps you determine how much of your payment is going toward
reducing the loan principal

Ram has a $10,000 loan with an annual interest rate of 5%, and a term of 3 years (36
months), and he wants to calculate the principal payment for the first month (month 1).

Loan Amount ₹ 10,000 Months IPMT PPMT PMT= IPMT+PPMT

Annual Intrest rate 5% 1 ₹ 41.67 ₹ 258.04 ₹ 299.71
Term (Months) 36 2 ₹ 40.59 ₹ 259.12 ₹ 299.71
PMT ₹ -299.71 3 ₹ 39.51 ₹ 260.20 ₹ 299.71
PPMT -₹ 258.04 4 ₹ 38.43 ₹ 261.28 ₹ 299.71
IPMT -₹ 41.67 5 ₹ 37.34 ₹ 262.37 ₹ 299.71
PPMT + IPMT -₹ 299.71 6 ₹ 36.25 ₹ 263.46 ₹ 299.71
7 ₹ 35.15 ₹ 264.56 ₹ 299.71
8 ₹ 34.05 ₹ 265.66 ₹ 299.71
9 ₹ 32.94 ₹ 266.77 ₹ 299.71
10 ₹ 31.83 ₹ 267.88 ₹ 299.71
11 ₹ 30.71 ₹ 269.00 ₹ 299.71
12 ₹ 29.59 ₹ 270.12 ₹ 299.71
13 ₹ 28.46 ₹ 271.24 ₹ 299.71
14 ₹ 27.33 ₹ 272.37 ₹ 299.71
15 ₹ 26.20 ₹ 273.51 ₹ 299.71
16 ₹ 25.06 ₹ 274.65 ₹ 299.71
17 ₹ 23.92 ₹ 275.79 ₹ 299.71
18 ₹ 22.77 ₹ 276.94 ₹ 299.71
19 ₹ 21.61 ₹ 278.10 ₹ 299.71
20 ₹ 20.45 ₹ 279.26 ₹ 299.71
21 ₹ 19.29 ₹ 280.42 ₹ 299.71
22 ₹ 18.12 ₹ 281.59 ₹ 299.71
23 ₹ 16.95 ₹ 282.76 ₹ 299.71
24 ₹ 15.77 ₹ 283.94 ₹ 299.71
25 ₹ 14.59 ₹ 285.12 ₹ 299.71
26 ₹ 13.40 ₹ 286.31 ₹ 299.71
27 ₹ 12.21 ₹ 287.50 ₹ 299.71
28 ₹ 11.01 ₹ 288.70 ₹ 299.71
29 ₹ 9.81 ₹ 289.90 ₹ 299.71
30 ₹ 8.60 ₹ 291.11 ₹ 299.71
31 ₹ 7.38 ₹ 292.32 ₹ 299.71
32 ₹ 6.17 ₹ 293.54 ₹ 299.71
33 ₹ 4.94 ₹ 294.77 ₹ 299.71
34 ₹ 3.72 ₹ 295.99 ₹ 299.71
35 ₹ 2.48 ₹ 297.23 ₹ 299.71
36 ₹ 1.24 ₹ 298.47 ₹ 299.71
yment for a specific
nt is going toward

of 3 years (36
nth (month 1).
The PV (Present Value) function in Excel is used to calculate the present value of an investment or loan, which
represents the current worth of a series of future cash flows, discounted at a specific interest rate.

You have an opportunity to receive $1,000 per year for the next five years, and you want to
know the present value of these cash flows at an annual discount rate of 5%.

Amount ₹ 1,000
Annual Discount rate 5%
Term (Year) 5
PV ₹ -4,329.48
ment or loan, which
interest rate.

nd you want to
e of 5%.
=PV(rate, nper, pmt, [fv], [type])
rate: The interest rate per period.
nper: The total number of payment periods.
pmt: The payment made each period; it must remain constant throughout.
[fv] (optional): The future value or cash balance you want to attain after the last payment is mad
[type] (optional): Indicates whether payments are due at the beginning or end of the period. Us
fter the last payment is made. If omitted, it is assumed to be 0.
ing or end of the period. Use 0 for end of the period (default) or 1 for the beginning of the period.
Present Value (PV) ₹ 100,000.00
Interest 8%
Time (year) 5
PMT
IPMT
PPMT
IPMT+PPMT
PV
 The NPER (Number of Periods) function in Excel is used to calculate the number of payment periods required
to reach a specific financial goal or to repay a loan or investment, given a constant interest rate and periodic
payments. This function helps you determine how long it will take to achieve a financial objective or to repay a
loan.

You want to determine how many years it will take to save $50,000 by contributing $500 each
month into an investment account with an annual interest rate of 6%.

Amount $ 50,000.00
Annual Discount rate 6%
Monthly Contribution $ 500.00
NPER
nt periods required
t rate and periodic
ective or to repay a

buting $500 each

6%.
 Imagine you have a $10,000 loan with a 5% annual interest rate, and you plan to make
monthly payments of $200. You want to find out how many months it will take to repay the
loan completely.

Loan Amount $ 10,000.00

Annual Discount rate 5%
Monthly Payment $ 200.00
NPER
plan to make
ke to repay the
 This function helps you determine the interest rate associated with a loan or
investment.

Suppose you have a $10,000 loan, a term of 3 years (36 months), and monthly payments of
$300. You want to find out the interest rate associated with this loan.

Loan Amount $ 10,000.00

Monthly Payment $ 300.00
Term (Year) 3
Rate
ith a loan or

hly payments of
oan.