Excel Intermediate Financial Functions
INTERMEDIATE Financial Functions
Learn to work with future value present value net present value interest rate and payment calculations using FV PV NPV RATE and PMT.
Financial Functions Overview
Financial functions help calculate values associated with investments loans rates and regular payments.
FV PV NPV RATE and PMT.
Value
FV and PV calculate future value and present value.
Investment Evaluation
NPV calculates net present value from a series of cash flows.
Rate and Payment
RATE calculates an interest rate while PMT calculates a periodic payment.
Essential Terms
Review the terms commonly used with the financial functions in this topic.
FV and PV Functions
FV and PV calculate values at different points in time using a rate and a number of periods.
Future and Present Value
Use FV to calculate a future value and PV to calculate a present value.
FV
=FV(rate,nper,pmt,pv)
Calculates the future value based on a constant interest rate and periodic values.
PV
=PV(rate,nper,pmt,fv)
Calculates the present value based on a constant interest rate and periodic values.
NPV Function
NPV calculates the net present value of a series of future cash flows using a discount rate.
Syntax
=NPV(rate,value1,value2)
The rate is the discount rate and the value arguments represent future cash flows.
Example
=NPV(B1,B2:B6)
Calculates net present value using the rate in B1 and the cash flows in B2 through B6.
RATE and PMT Functions
RATE calculates an interest rate per period while PMT calculates a regular payment.
Interactive Function Explorer
Review FV PV NPV RATE and PMT and the financial calculation each function performs.
Key Takeaways
Match each financial function to the calculation it is designed to perform.
Calculates future value.
Calculates present value.
Calculates net present value from discounted future cash flows.
Calculates the interest rate per period.
Calculates a periodic payment.
Knowledge Check
Test your understanding of FV PV NPV RATE and PMT.