Evaluating an investment is easy when you know it’s annual interest rate. If you don’t know an investment’s return, but you do know other facts about it, you can use the DISC function to find its discount rate. You can then compare the discount rate to the return from other investments to evaluate your options.
- [Instructor] Evaluating investment is easy…when you know its annual interest rate.…If you don't know the investment's return,…but you do know other facts about it,…you can use the DISC function to find its discount rate.…In this movie I will demonstrate…how to make that calculation,…and my sample file is DiscountRate_03_09.…You can find it in the Chapter03 folder…of your Exercise Files collection.…I have five piece of information.…The first is the Settlement date…that's at C3.…That's the date that I purchased the security.…
Next is Maturity date,…that is the date that the security reaches maturity,…stops earning interest,…and then we'll receive a payment about a week…or two weeks later.…Next is Price per $100, so face value.…So in other words, if I receive $100 in return,…what am I being asked to pay for?…Next is the Redemption value per $100 of face value.…Except for very unusual circumstances, that will be 100,…but you still need to put in that bit of information.…
And finally, Basis is how Excel looks at the calendar,…
- Analyzing loans, payments, and interest
- Calculating depreciation
- Determining values and rates of return
- Calculating bond coupon dates and security durations
- Calculating security prices and yields
- Calculating prices and yields of securities with odd periods
- Analyzing simulation results
Skill Level Intermediate
1. Analyzing Loans, Payments, and Interest
2. Calculating Depreciation
3. Determining Values and Rates of Return
4. Calculating Bond Coupon Dates and Security Durations
5. Calculating Security Prices and Yields
6. Analyzing Simulation Results
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