PMT & FV

In this section we will look at some of the financial functions of Excel.  Excel does a good job of explaining how these are used.  To look at these functions, return to the Funexam file on your data disk and click on the financial tab at the bottom of the worksheet.  

Notice the different financial functions listed on the screen.  These examples include the FV, PV PMT and Rate functions.  

Let’s first look at the PMT function.  This function is often used when dealing with borrowed money and interest rates.  Basically with this function, you specify the interest rate at which you borrowed the money, the number of months over which you wish to repay the money and the amount of money you want to borrow.  With this information you can figure out what monthly payments will be to repay your debt at the given interest rate over the specified time period.  To figure this number, use the following function:

=pmt(cell address of the Interest rate/12, cell address of the length of the loan, -cell address of the amount of the loan)

When you hit enter, the monthly payment amount will be figured.

The FV function is set up in a similar fashion to the PMT function.  However, this function is used to figure the amount of money you will have accumulated at the end of a period of time, give a specific monthly investment and monthly interest rate.  To figure this amount, use the following function.

=fv(cell address of the interest rate/12,cell address of the length of investment time,-cell address of the monthly investment amount)

When you hit Enter, the amount of money you will have earned at the conclusion of the specified time will be shown.