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Learn 5 Financial Functions in Excel

Admin
Duration: 9:53
Submitted: 7 months ago
Views: 417
Link to this video:

Description:

Do you want to know how to perform common financial calculations? Excel is a great tool for doing just that! In this blog post, we will discuss five key financial functions in Excel and how to use them.

What are those Financial Functions in Excel?

These functions are PMT, RATE, NPER PV FV and they are used to calculate payments, interest rates, loan terms, present values and future values. So if you want to learn more about financial calculations or improve your skills in Excel, keep Watching!

Table of Content;

00:00 INTRODUCTION

01:22 PMT Function 

03:40 RATE Function

05:09 NPER Function

06:24 PV Function

07:40 FV Function

We have 5 functions to learn in this video, keep scrolling through videos using the above table of content but we will learn 5 key function's syntax in the following paragraphs.

First part of financial functions, we have PMT Function, Lets see the syntax and description of PMT Function below;

PMT Function in Excel

The PMT function calculates the periodic payment for a loan. The syntax is:

PMT(rate, nper, pv, [fv], [type])

Rate is the interest rate per period.
Nper is the number of periods in the loan.
Pv is the present value of the loan.
Fv is optional and it is the future value.
Type is optional as well and if type = 0, PMT will calculate payments at the end of each period; However If type = l, payment will be calculated at beginning of each period.

We have used this function in our financial statement template where we want to see what amount can be loaned on a monthly basis.


The Rate is the interest rate per period, Nper is the number of periods in loan, Pv is the present value (or amount) of loan and Fv if it's not 0 then that's the future value we want to attain. If type = l then payment will be calculated at beginning of each period, if type = 0 then payment will be calculated at the end of each period.

We are going to use PMT function in a case study later on in this video but first let's look at another financial functions available within Excel.

RATE Function in excel

Second part of financial functions we have RATE Function; Lets see the syntax and description of RATE Function below;

The RATE function returns the interest rate per period of an annuity. The syntax is:

RATE (nper, pmt, pv, [fv], [type], [guess])

Nper is the total number of payments for a loan.
PMT is the payment made each period.
Pv is the present value of a loan.
Fv is optional and it's the future value or cash balance we want to attain at end of all periods,
Type is also an optional argument which indicates when payments are due; 0 = end of period (default) and l = beginning of period Guess as well is an optional argument which is used to indicate the initial guess for RATE function.

We are going to use Rate Function in a case study later on in this video but first let's look at another financial functions available within Excel.

NPER Function in excel

Third part of financial functions we have NPER function, Lets see the syntax and description of NPER function below;

The NPER function calculates the number of payments for an annuity. The syntax is:

NPER(rate, pmt, pv, [fv], [type])

Rate is the interest rate per period.
PMT is the payment made each period.
Pv is the present value of a loan, Fv is optional and it's the future value or cash balance we want to attain at end of all periods, Type as well it's an optional argument which indicates when payments are due; l = beginning of period (default) and 0= end of period

We have used this function in our financial statement template where we want to see the number of periods (number of months) that it will take us to repay a loan.

We are going to use this function in a case study later on in this video but first let's look at another financial functions available within Excel.

PV Function in excel

Fourth part of financial functions we have PV Function, Lets see the syntax and description of PV function below;

The PV function calculates the present value of an annuity. The syntax is:

PV(rate, nper, pmt, [fv], [type])

Rate is the interest rate per period.
Nper is the number of periods in the loan.
PMT is the payment made each period. Fv is optional and it's the future value or cash balance we want to attain at end of all periods, Type is also an optional argument which indicates when payments are due; 0 = end of period (default) and l = beginning of period

We have used this function in our financial statement template where we want to see the present value of a loan.

We are going to use this function in a case study later on in this video but first, let's look at another financial function available within Excel.

FV Function in excel

Fifth and last part of financial functions we have FV Function, Lets see the syntax and description of FV function below;

The FV function calculates the future value of an annuity. The syntax is:

FV(rate, nper, pmt, [pv], [type])

Rate is the interest rate per period.
Nper is the number of periods in loan.
PMT is the payment made each period.
Pv is optional and it's the present value or cash balance we have at the start of all periods,
Type as well it's an optional argument which indicates when payments are due; l = beginning of period (default) and 0= end of the period

We have used this function in our financial statement template where we want to see the future value of a loan.

Conclusion

Financial functions are important for financial statements, budgets and financial planning. The five key financial functions in Excel namely PMT, RATE, NPER PV FV can be used to perform these calculations. In this video we have looked at the syntax and description of each function. We have also used these functions in a case study.