Question

Chapter 2 is using the EXCEL functions FV, PV, NPV, PMT, NPER, RATE & SUM. Explain in plain English in a clear and detail way how you can use these functions. How many inputs you need for each of these outputs? Are all inputs required? Why not? Use the excel help in order to understand these Formulas. Do not copy and paste. This question has seven parts, identify each part with a letter from the beginning of the alphabet, as 1a for FV, 1b for PV etc.

Answer 1

1a.

FV = CALCULATES FUTURE VALUE OF AN INVESTMENT

(INPUT) FORMULA =FV(RATE,NPER,PMT,PV)

INPUT MAY OR MAY NOT REQUIRED - EITHER PV OR PMT

example-

RATE	10%
NPER	5
PMT	2000	=FV(10%,5,2000,10000)
PV	10000	$ 3,894.90

1b

PV = CALCULATES THE PRESENT VALUE OF AN INVESTMENT

FORMULA =PV(RATE,NPER,PMT,FV)

INPUT NOT REQUIRED = EITHER PMT OR FV

RATE	10%
NPER	5
PMT	2000	=PV(10%,5,2000,10000)
FV	10000	$ 13,790.79

1c

NPV = CALCULATES THE NET PRESENT VALUE OF AN INVESTMENT

FORMULA =(RATE , VALUES)

CASH FLOWS
YEAR 0	-1000
YEAR 1	300
YEAR 2	300
YEAR 3	300
YEAR 4	300
YEAR 5	300
	10.00%
NPV	$ 124.76

=NPV(10%,-1000,300,300,300,300,300)

1d.

PMT- CALCULATES AMOUNT OF PAYMENT OVER A PERIOD OF TIME

INPUT=PMT(RATE,NPER,PV,FV)

INPUT NOT REQUIED = EITHER PV OR FV

RATE	10%
NPER	5
PV	0	=PMT(10%,5,0,10000)
FV	10000	$ 1,637.97

1e.

NPER = CALCULATES NUMBER OF PAYMENTS OVER A PERIOD OF TIME

INPUT =NPER(RATE,PMT,PV,FV)

NOT REQUIRED = ANY TWO OF PMT , FV AND PV ATLEAST REQUIRED

RATE	10%
PV	0	=NPER(10%,1000,0,10000)
FV	10000	₹ 7.27
PMT	1,000.00

1f.

RATE = CALCULATES THE RATE OF INTERST OF AN INVESTMENT

INPUT =RATE(NPER,PMT,PV,FV)

NOT REQUIRED - ATLEAST TWO OF THREE (PMT,PV,FV

NPER	5
PV	0	=RATE(NPER,PMT,PV,FV)
FV	10000	35%
PMT	₹ 1,000.00

1g.

SUM= ADDS ALL THE VALUES

INPUT =SUM(VALUES)

1000
2000
3000
4000
5000
15000	=SUM(1000,2000,3000,4000,5000)