SLN | SYD | DB | DDB | VDB Excel offers five different depreciation functions. We consider an asset with an initial cost of $10,000, a salvage value (residual value) of $1000 and a useful life of 10 periods (years). Below you can find the results of all five functions. Each function will be explained […]
This example teaches you how to create a loan amortization schedule in Excel. 1. We use the PMT function to calculate the monthly payment on a loan with an annual interest rate of 5%, a 2-year duration and a present value (amount borrowed) of $20,000. We have named the input cells. 2. Use the PPMT […]
What’s compound interest and what’s the formula for compound interest in Excel? This example gives you the answers to these questions. 1. Assume you put $100 into a bank. How much will your investment be worth after one year at an annual interest rate of 8%? The answer is $108. 2. Now this interest ($8) […]
Investment | Annuity This example teaches you how to calculate the future value of an investment or the present value of an annuity. Tip: when working with financial functions in Excel, always ask yourself the question, am I making a payment (negative) or am I receiving money (positive)? Investment Assume that at the end of […]
This example teaches you how to compare loans with different durations in Excel. 1. First, we calculate the monthly payment on a loan with an annual interest rate of 6%, a 20-year duration and a present value (amount borrowed) of $150,000. Note: we make monthly payments, so we use 6%/12 = 0.5% for Rate and […]
