Category "Excel-Formulas"

<p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">If you're looking to learn how to calculate profit margins in Excel, you've come to the right place! In this article, we will walk you through the process step-by-step. We'll also provide some examples so that you can see how it's done.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Profit margin is an important metric for businesses of all sizes. By understanding and calculating these margins, business owners can make informed decisions about their operations and future growth potential. So, if you're ready to learn how to do it, let's get started!</p> <h2 style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.55556em 0px 0.888889em; font-size: 1.5rem; cursor: text; line-height: 1.11111; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; letter-spacing: -0.025em; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; white-space: pre-wrap; text-size-adjust: auto; user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; -webkit-user-select: auto; color: #0d0d0d; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Table of Content;</span></h2> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; color: #0d0d0d; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">00:00 INTRODUCTION</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; color: #0d0d0d; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">00:40 Gross Profit Margin in Excel</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; color: #0d0d0d; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">04:02 Operating Profit Margin in Excel</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; color: #0d0d0d; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">07:00 Net Profit Margin in Excel</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; color: #0d0d0d; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">09:40 conclusion</span></p> <h2 style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.55556em 0px 0.888889em; font-size: 1.5rem; cursor: text; line-height: 1.11111; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; letter-spacing: -0.025em; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; white-space: pre-wrap; text-size-adjust: auto; user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; color: #0d0d0d; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">What is Profit Margin?</span></h2> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><a href="https://www.investopedia.com/terms/p/profitmargin.asp">Profit margin</a> is a metric that measures how much profit a company makes on each dollar of sales. In other words, it's the percentage of each dollar that goes towards profits. This can be calculated by dividing net income by total revenue.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">There are three types of profit margins: gross profit margin, operating profit margin, and net profit margin. Let's take a closer look at each of them.</p> <h3 style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.6em 0px 0.666667em; font-size: 1.25rem; cursor: text; line-height: 1.33333; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; letter-spacing: -0.025em; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; white-space: pre-wrap; text-size-adjust: auto; user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Gross Profit Margin</h3> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">The <a href="https://en.wikipedia.org/wiki/Gross_margin">gross profit margin</a> is the percentage of revenue that remains after subtracting the cost of goods sold from total sales. This metric measures how efficient a company is at turning its inventory into sales. In order to calculate it, you need to divide gross profit by total revenue.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">To calculate gross profit, you need to subtract the cost of goods sold from total sales. This number can be found on a company's income statement.</p> <h3 style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.6em 0px 0.666667em; font-size: 1.25rem; cursor: text; line-height: 1.33333; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; letter-spacing: -0.025em; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; white-space: pre-wrap; text-size-adjust: auto; user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Operating Profit Margin</h3> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">The <a href="https://corporatefinanceinstitute.com/resources/knowledge/finance/operating-profit-margin/">operating profit margin</a> is the percentage of revenue that remains after subtracting all operating expenses from total sales. This metric measures how efficient a company is at running its business. In order to calculate it, you need to divide operating profit by total revenue.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">To calculate operating profit, you need to subtract all operating expenses from total sales. This number can be found on a company's income statement.</p> <h3 style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.6em 0px 0.666667em; font-size: 1.25rem; cursor: text; line-height: 1.33333; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; letter-spacing: -0.025em; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; white-space: pre-wrap; text-size-adjust: auto; user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Net Profit Margin</h3> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">The <a href="https://www.investopedia.com/terms/n/net_margin.asp">net profit margin</a> is the percentage of revenue that remains after subtracting all expenses, including income taxes. This metric measures how much profit a company makes after accounting for all costs. In order to calculate it, you need to divide net income by total revenue.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">To calculate net income, you need to subtract income taxes from profits. This number can be found on a company's income statement.</p> <h2 style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.55556em 0px 0.888889em; font-size: 1.5rem; cursor: text; line-height: 1.11111; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; letter-spacing: -0.025em; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; white-space: pre-wrap; text-size-adjust: auto; user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">How to Calculate Profit Margins in Excel</h2> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Now that you know what profit margins are, let's take a look at how to calculate them in Excel. We'll walk you through the process step-by-step so that you can follow along easily.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">To start, open up a new Excel document and enter the following data into two columns: total revenue and net income.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Next, we'll calculate gross profit margin. </span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">In the third column, enter the formula =(B$-C$)/B$, where B is the cell containing total revenue and C is the cell containing cost of goods sold. This will give you the percentage of each dollar that goes towards profits.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Then, we'll calculate operating profit margin. </span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">In the fourth column, enter the formula =(D$-E$)/D$, where D is the cell containing total revenue and E is the cell containing operating expenses. This will give you the percentage of each dollar that remains after subtracting all operating expenses from total sales.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Finally, we'll calculate net profit margin. </span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">In the fifth column, enter the formula =(F$-G$)/F$, where F is the cell containing total revenue and G is the cell containing income taxes. This will give you the percentage of each dollar that remains after subtracting all expenses from total sales.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">And that's it! You've now calculated profit margins in Excel.</p> <h2 style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.55556em 0px 0.888889em; font-size: 1.5rem; cursor: text; line-height: 1.11111; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; letter-spacing: -0.025em; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; white-space: pre-wrap; text-size-adjust: auto; user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Conclusion</h2> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Profit margin is an important metric for businesses of all sizes. By understanding and calculating these margins, business owners can make informed decisions about their operations and future growth potential.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Thank you for reading our article on how to calculate profit margins in Excel. We hope you found it helpful!</p>

<p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">If you're a business owner who is looking to invest in new projects or products, you'll want to know how to use the NPV function in Excel.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">his function can help you calculate the present value of future cash flows, which is an important calculation to make when making decisions about investments.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">In this video tutorial, we will walk you through the steps of using the NPV function in Excel and show you how to use it in real-world scenarios.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; color: #0d0d0d; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Table of Content;</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; color: #0d0d0d; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">00:00 INTRODUCTION</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; color: #0d0d0d; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">00:40 NPV Formula in Excel</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; color: #0d0d0d; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">06:40 conclusion</span></p> <h2 style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.55556em 0px 0.888889em; font-size: 1.5rem; cursor: text; line-height: 1.11111; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; letter-spacing: -0.025em; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; white-space: pre-wrap; text-size-adjust: auto; user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; -webkit-user-select: auto; color: #0d0d0d; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">What is NPV Function?</span></h2> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">The NPV function in Excel is a financial function that calculates the present value of future cash flows. The NPV function takes into account the time value of money, which is the idea that money today is worth more than money in the future. This is because money today can be invested and earn interest, while money in the future cannot.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">The NPV function calculates the present value of all future cash flows, and then subtracts any costs or investments that are required to achieve those cash flows. This calculation gives you a net present value (NPV) for the given set of cash flows.</p> <h2 style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.55556em 0px 0.888889em; font-size: 1.5rem; cursor: text; line-height: 1.11111; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; letter-spacing: -0.025em; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; white-space: pre-wrap; text-size-adjust: auto; user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">How to Use NPV Function in Excel?</h2> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">The NPV function in Excel is used to calculate the present value of future cash flows. This can be an extremely useful tool for businesses that are looking to invest in new projects or products.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">First thing first, lets learn the syntax of NPV function in excel;</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">=NPV(rate,value)</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Rate is the discount rate per period and must be entered as a decimal. For example, if you want to discount at a rate of 12 percent, you would enter 0.12 into this argument.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Value is the cash flow for each period. This can be entered as a range of cells or as an array.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">For example, if you have a series of cash flows that start in cell B15 and end in cell B20, you would enter B15:B20 as the value argument.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Now that we know the syntax of NPV function, lets see how to use it in excel;</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">We will use the NPV function in excel to calculate the present value of future cash flows for a new product. The cash flows will be monthly, and we will discount at a rate of 12 percent.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">The first step is to enter the data into Excel. We will start by entering the date in cell A15, and then we will enter the monthly cash flows in cells B15:B20.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Next, we will enter the discount rate in cell C15, and then we will copy the formula from cell D15 down to D20. This will calculate the present value for each month's cash flow.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Now that we have our data entered, we can use the NPV function to calculate the NPV for the entire series of cash flows. We will enter the following formula in cell E15:</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">=NPV(C15,B15:B20)</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">This will give us the NPV for our new product. As you can see, the NPV is negative $733. This means that we would need to invest $733 today in order to have a positive NPV at the end of the six-month period.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">While a negative NPV is not ideal, it is not necessarily a bad thing. It simply means that we need to take into account the time value of money when making our decision about whether or not to invest in the new product.</p> <h2 style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.55556em 0px 0.888889em; font-size: 1.5rem; cursor: text; line-height: 1.11111; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; letter-spacing: -0.025em; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; white-space: pre-wrap; text-size-adjust: auto; user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Conclusion</h2> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">In this article, we have learned how to use the NPV function in Excel to calculate the present value of future cash flows. This can be an extremely useful tool for businesses that are looking to invest in new projects or products.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">While a negative NPV is not ideal, it is not necessarily a bad thing. It simply means that we need to take into account the time value of money when making our decision about whether or not to invest in the new product.</p>

<p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">When you take out a loan, the lender will usually require you to make regular payments over time. This can be difficult to keep track of without a loan amortization schedule.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">In this tutorial, we will show you how to create a loan amortization schedule in Excel. It's easier than you might think! With this tool, you'll be able to keep track of your payments and ensure that you're on track to pay off your loan.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; -webkit-user-select: auto; color: #0d0d0d; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Table of Content;</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; -webkit-user-select: auto; color: #0d0d0d; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">00:00 INTRODUCTION</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; -webkit-user-select: auto; color: #0d0d0d; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">00:40 Loan Amortization Schedule</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; -webkit-user-select: auto; color: #0d0d0d; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">08:40 conclusion</span></p> <h2 style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.55556em 0px 0.888889em; font-size: 1.5rem; cursor: text; line-height: 1.11111; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; letter-spacing: -0.025em; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; white-space: pre-wrap; text-size-adjust: auto; user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; -webkit-user-select: auto; color: #0d0d0d; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">What is Loan Amortization Schedule?</span></h2> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">A loan amortization schedule is a table that shows you how much of your loan will be paid off over time. It includes information such as the interest rate, monthly payment amount, and remaining balance.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">This type of schedule can be helpful in budgeting for your loan payments and keeping track of your progress. It can also help you see the true cost of your loan over time.</p> <h2 style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.55556em 0px 0.888889em; font-size: 1.5rem; cursor: text; line-height: 1.11111; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; letter-spacing: -0.025em; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; white-space: pre-wrap; text-size-adjust: auto; user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Why Use a Loan Amortization Schedule?</h2> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">There are a few reasons why you might want to use a loan amortization schedule. First, it can help you budget for your payments. Knowing how much you need to pay each month can help you plan your finances accordingly.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Second, it can help you stay on track to pay off your loan. If you know what your remaining balance is and how much needs to be paid each month, you can make sure that you're making progress.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Finally, a loan amortization schedule can give you a good overview of the true cost of your loan. By seeing how much interest you'll pay over time, you can make sure that you're getting the best deal possible.</p> <h2 style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.55556em 0px 0.888889em; font-size: 1.5rem; cursor: text; line-height: 1.11111; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; letter-spacing: -0.025em; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; white-space: pre-wrap; text-size-adjust: auto; user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Can We Calculate Loan Amortization Schedule Online Without Excel?</h2> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">There are a few websites that offer calculators to help you create a loan amortization schedule. However, these calculators can be limited and may not include all of the information that you need.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Excel is a versatile program that can easily create this type of schedule. With some simple formulas, you can customize your schedule to include all of the information that you need.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Tools you can use to create loan amortization schedule;</p> <ul style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 0px 2rem; padding: 0px; list-style: none; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"> <li style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin-top: 0.25rem; margin-bottom: 0.25rem; padding: 0px 0px 0px 0.5rem; list-style-position: outside; list-style-type: disc; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Calculator.net</li> <li style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin-top: 0.25rem; margin-bottom: 0.25rem; padding: 0px 0px 0px 0.5rem; list-style-position: outside; list-style-type: disc; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Calculatorsoup</li> </ul> <h2 style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.55556em 0px 0.888889em; font-size: 1.5rem; cursor: text; line-height: 1.11111; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; letter-spacing: -0.025em; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; white-space: pre-wrap; text-size-adjust: auto; user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">How to Create a Loan Amortization Schedule in Excel</h2> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Now that we've gone over what a loan amortization schedule is and why you might want to use one, let's get into how to create one. Creating a loan amortization schedule in Excel is actually very easy. We'll walk you through the steps below.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">We will use the following functions to create loan amortization schedule in excel;</p> <ul style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 0px 2rem; padding: 0px; list-style: none; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"> <li style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin-top: 0.25rem; margin-bottom: 0.25rem; padding: 0px 0px 0px 0.5rem; list-style-position: outside; list-style-type: disc; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; -webkit-user-select: auto; margin-top: 1.2em; margin-bottom: 1.2em; color: #0d0d0d; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">PMT Function</span></li> <li style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin-top: 0.25rem; margin-bottom: 0.25rem; padding: 0px 0px 0px 0.5rem; list-style-position: outside; list-style-type: disc; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; -webkit-user-select: auto; margin-top: 1.2em; margin-bottom: 1.2em; color: #0d0d0d; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">IPMT Function</span></li> <li style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin-top: 0.25rem; margin-bottom: 0.25rem; padding: 0px 0px 0px 0.5rem; list-style-position: outside; list-style-type: disc; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; -webkit-user-select: auto; margin-top: 1.2em; margin-bottom: 1.2em; color: #0d0d0d; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">PPMT Function</span></li> </ul> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; -webkit-user-select: auto; color: #0d0d0d; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Lets learn the syntax of all of the above functions below;</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; -webkit-user-select: auto; color: #0d0d0d; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">The PMT function calculates the payment for a loan. The syntax is:</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">PMT(rate,nper,pv,type)</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Where rate is the annual interest rate of the loan, nper is the number of payments to make on the loan, pv is the present value (or amount borrowed), and type can be either 0 or omitted for a regular loan or type can be set to</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">The IPMT function calculates the interest payment for a given period of the loan. The syntax is:</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">IPMT(rate,per,nper,pv)</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Where rate is the annual interest rate of the loan, per is the number of the payment for which you want to calculate the interest, nper is the number of payments to make on the loan, and pv is the present value (or amount borrowed).</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">The PPMT function calculates the principal payment for a given period of the loan. The syntax is:</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; -webkit-user-select: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">PPMT(rate,per,nper,pv)</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Where rate is the annual interest rate of the loan, per is the number of the payment for which you want to calculate the principal, nper is the number of payments to make on the loan, and pv is</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Now that we know how to use Excel to calculate a loan amortization schedule, let's put it into practice. In the below example, we will create a schedule for a loan with the following information:</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">- Loan amount: $15,000</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">- Annual interest rate: 12%</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">- Number of payments: 120</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">We will also assume that all payments are made at the beginning of each month.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Now let's get started!</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"> </p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Step One: Enter the loan amount, annual interest rate, and number of payments into a spreadsheet.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Step Two: In the second column, use the PMT function to calculate the monthly payment for the loan.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">=PMT(A12/1200,B11,-C11)</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">In our example, this would be:</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">=PMT(12%/1200,120,-15000)</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">which gives us a result of $172.61.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Step Three: In the third column, use the IPMT function to calculate the interest payment for each period.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">=IPMT(A12/1200,B13,B11,-C11)</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">In our example, this would be:</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">=IPMT(12%/1200,01,120,-15000)</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">which gives us a result of $15.00.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Step Four: In the fourth column, use the PPMT function to calculate the principal payment for each period.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">=PPMT(A12/1200,B13,B11,-C11)</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">In our example, this would be:</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">=PPMT(12%/1200,01,120,-15000)</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">which gives us a result of $127.61.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Step Five: The final column will show the remaining balance of the loan after each payment is made.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">=C11-B13</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">In our example, this would be:</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">=15000-127.61 which gives us a result of $14,472.39.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; user-select: auto; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; caret-color: #00bdb8; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; text-size-adjust: auto; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">And there you have it! Your very own loan amortization schedule in Excel. With just a few simple steps, you can have all the information you need to track your loan payments. Be sure to experiment with different interest rates and payment terms to see how they impact your schedule. And most importantly, stay on top of those payments!</p>

<p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">If you want to know how your investment is doing, you need to calculate the <a style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; --tw-text-opacity: 1; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));" href="https://youtu.be/InGlZ13tqE4" target="_blank" rel="noopener noreferrer"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">compound annual growth rate</span></a> (CAGR). This will tell you how much your investment has grown each year, on average.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">You can use the RRI function in Excel to do this. In this blog post, we will show you how to use this function and explain what it means. We will also provide an example so that you can see how it works.</p> <h2 style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.55556em 0px 0.888889em; font-size: 1.5rem; cursor: text; line-height: 1.11111; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; letter-spacing: -0.025em; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">What is Compound Annual Growth Rate (CAGR)?</h2> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">The <a style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; --tw-text-opacity: 1; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));" href="https://www.investopedia.com/investing/compound-annual-growth-rate-what-you-should-know/" target="_blank" rel="noopener noreferrer">compound annual growth rate</a> (CAGR) is a measure of how much an investment has grown, on average, over a period of time. It takes into account the effect of compounding interest.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">This means that the CAGR will be higher than the simple annual growth rate (SAGR), which only looks at the change in the investment's value from one year to the next.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; color: #202124; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><img style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; display: block; vertical-align: middle; max-width: 100%; height: auto; margin-top: 2em; margin-bottom: 2em; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));" src="https://www.gstatic.com/education/formulas2/397133473/en/cagr.svg" alt="\text{CAGR} = \left( \frac{V_\text{final}}{V_\text{begin}} \right)^{1/t} - 1" /></span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; color: #202124; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">where;</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; color: #202124; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">CAGR = compound annual growth rate</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Vbegin = beginning value</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Vfinal = final value</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">t = time in years</p> <h2 style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.55556em 0px 0.888889em; font-size: 1.5rem; cursor: text; line-height: 1.11111; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; letter-spacing: -0.025em; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">How to Calculate the CAGR in Excel</h2> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">To calculate the compound annual growth rate (CAGR) of an investment in Excel, you can use the RRI function. This function takes four arguments:</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">- Vbegin: The beginning value of the investment</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">- Vfinal: The final value of the investment</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">- t: The number of years over which you want to calculate the CAGR</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">- type: The type of return that you want to use. This can be either "I" for inflation-adjusted returns or "F" for nominal returns.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">The RRI function will return the compound annual growth rate for the given set of data.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">The syntax of RRI function is as follows;</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));"><span style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; font-weight: bolder; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">=RRI(Vbegin, Vfinal, t, type)</span></p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">An Example of How to Use the RRI Function</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Suppose you have the following data:</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">- Vbegin: $100</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">- Vfinal: $200</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">- t: five years</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">- type: "I" (inflation-adjusted returns )</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">The RRI function will return the compound annual growth rate for this data. The syntax of the function is as follows;</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">=RRI(100, 200, 60, "I")</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">This will return a compound annual growth rate of 14%. Note that this is different from the simple annual growth rate (SAGR), which would return a compound annual growth rate of 15%.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">The RRI function takes into account the effect of compounding interest, which will give you a more accurate measure of the investment's growth.</p> <h2 style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.55556em 0px 0.888889em; font-size: 1.5rem; cursor: text; line-height: 1.11111; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; letter-spacing: -0.025em; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">Conclusion</h2> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 0px 0px 1.2em; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">The compound annual growth rate (CAGR) is a useful measure of how an investment is doing. You can use the RRI function in Excel to calculate this rate for any given set of data.</p> <p style="box-sizing: border-box; --tw-border-opacity: 1; --tw-shadow: 0 0 transparent; --tw-ring-inset: var(--tw-empty, ); --tw-ring-offset-width: 0px; --tw-ring-offset-color: #fff; --tw-ring-color: rgba(0,38,234,0.5); --tw-ring-offset-shadow: 0 0 transparent; --tw-ring-shadow: 0 0 transparent; margin: 1.2em 0px 0px; cursor: text; counter-reset: list-1 0 list-2 0 list-3 0 list-4 0 list-5 0 list-6 0 list-7 0 list-8 0 list-9 0; color: #1e293b; font-family: 'Inter var', ui-sans-serif, system-ui, -apple-system, 'system-ui', 'Segoe UI', Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 17.5px; white-space: pre-wrap; border: 0px solid rgba(226,232,240,var(--tw-border-opacity));">We hope you found this blog post helpful. If you have any questions, please don't hesitate to ask us in the comments section.</p>