Top 5 Financial Functions in Excel

 In Uncategorized

Introduction to Excel Financial Functions

Financial functions in Excel have been made available to execute a variety of financial calculations, including calculations of yield, investment valuations, interest rates, internal rate of return, asset depreciation, payments and more.

Today we are going to look at 5 most frequently used financial functions that are illustrated in the table below.
financial functions in excel

Present Value (PV)

  • PV helps you to find the present value of money.
  • PV(Rate, Nper, Pmt, Fv), where:
  • Rate – interest rate;
  • Nper – the number of periods;
  • Pmt – payment;
  • Fv – future value

Let’s find PV (present value of money) for this question on the screen.
financial functions in excel
financial functions in excel
$2.92 Million is the PV of $7 Million in 5 years, which means that in order to get $7M in 5 years, you have to have $2.92M now.

Interest Rate Calculation (RATE)

RATE function calculates the interest rate required to pay off a loan or to reach a target amount on investment, over a given period.

  • RATE(Nper, Pmt, PV, FV), where:
  • Nper – the number of periods;
  • Pmt – payment;
  • PV – present value;
  • Fv – future value

Let’s find RATE for this question on the screen.
financial functions in excel
financial functions in excel
As you can see from the answer we’ve got, you need 6% of the interest rate on your investment in order to get $7 million in 5 years.

Internal Rate of Return (IRR)

Internal Rate of Return is a metric used in capital budgeting to estimate the profitability of potential investments.

Let’s take a look at our example below.
financial functions in excel
financial functions in excel
So, 23% is the rate of return on $45,000 investment that you would receive in 5 years – definitely worth buying this software.

Net Present Value (NPV)

Net Present Value (NPV) is the calculation used to find today’s value of a future stream of payments.

  • NPV(Rate,Value1,Value2,…), where:
  • Rate – Interest Rate;
  • Value 1, Value 2, etc. – Cash Flows over the years

In our example, the net present value is $34.36, which is the current value of the 4 years cash flow.
financial functions in excel
financial functions in excel

Payment (PMT)

PMT is used to get the periodic payment of the loan.

  • PMT(Rate,Nper,Pv,Fv), where:
  • Rate – interest rate;
  • Nper – number of periods;
  • Pv – present value;
  • Fv – future value.

Let’s find PMT for this question on the screen.
financial functions in excel
financial functions in excel
As you can see, $1,186.98 is the annual payment you need to make to pay off the $5,000 loan in 5 years.

Excel Financial Functions List

A list of Excel Financial Functions is provided below for your reference:

  • Investment value functions including FV, FVSCHEDULE, NPV, PV, RECEIVED, XNPV.
  • The internal rate of return functions including IRR, MIRR, XIRR.
  • Asset depreciation functions including AMORDEGRC, AMORLINC, DB, DDB, SLN, SYD, VDB.
  • Payment functions including: CUMIPMT, CUMPRINC, IPMT, ISPMT, PMT, PPMT.
  • Dollar conversion including: DOLLARDE, DOLLARFR.
  • Yield functions including YIELD, YIELDDISC, YIELDMAT, ODDFYIELD, ODDLYIELD, TBILLEO, TBILLYIELD.
  • Price functions including: PRICE, PRICEDISC, PRICEMAT, ODDFPRICE, ODDLPRICE, TBILLPRICE.

If you want to learn more about the latest trends in Excel, follow our upcoming articles, get weekly updates and try our Game.


Calculate in a second

how much time you’ll save with Hot Key excellence

           
           
           
Recent Posts

Leave a Comment

How can we
help you?
Contact Us

Please, leave a message and we'll get back to you asap

0

Try FREE

Excel Game

excel ideas toolautomated workflow in excel