Financial Functions in Excel

(A very nice sample sheet for Solver can be found here: SOLVSAMP.XLS -- right-click and select "Save target as..."
Be sure that you have the Solver Add-in installed: If not, go to "Tools/Add-ins" and select "Solver Add-in")

Here are some commonly used financial functions in Excel:

There are 4 quantities that are interelated:

  1. Present Value (PV) = the value of the load or savings today.
  2. Interest Rate per period (RATE) = the interest rate, usually monthly (if given an annual rate, be sure to divide by 12!)
  3. Number of payment periods (NPER) = Number of payment periods (number of months usually).
  4. Periodic payment (PMT) = The payment per period (monthly payment usually). This value is the same for every payment period.

Given any 3 of the above 4 quantities, you can calculate the 4'th.

Use the following functions to calculate the missing value:


Another function that is commonly used in financial worksheets:

An example worksheet that uses all these functions can be downloaded here: finance.xls -- right-click and select "Save target as..."


Amoritize: To amortize a loan is to calculate a series of constant periodic payments to pay off both the principal (present value) of a loan as well as all accrued interest, based on a given periodic interest rate and a given total number of payments.

Amortization Table: An amortization table is a table that shows the interest being paid, the principle being paid and the current balance for each payment period of a loan. If the interest rate is constant, the interest and principle payments should sum to a constant value, which can be directly calculated using the PMT function.