Explanation

Financial Functions in Excel are used to perform calculations related to loans, investments, interest rates, payments, and financial planning.

In this Topic, you will learn:

• PMT
• PV
• FV
• RATE
• NPER

Common Financial Terms

Term	Meaning
PV	Present Value
FV	Future Value
PMT	Periodic Payment
RATE	Interest Rate per Period
NPER	Number of Periods

Example Data

Item	Value
Loan Amount	500,000
Annual Interest Rate	10%
Loan Period	5 Years
Payments per Year	12

When payments are monthly:

Monthly Interest Rate

=10%/12

Number of Payments

=5*12

Key Point

When the payment frequency is monthly, the interest rate and number of periods used in the financial function should generally also be monthly.

Practice

Create a Loan Information Table and calculate the monthly interest rate and total number of payments.