Managing personal and corporate finances takes careful planning. Many individuals and businesses try to save a certain amount of money, whether as part of an individual retirement account or a building fund. Once you determine how much you can set aside each month, you can use Excel’s NPER function to see how long it will take you to reach your goal.
- [Instructor] One way to evaluate an investment…is to determine how long it will take for you…to start with a set amount of money,…and given an annual interest rate,…or rate of growth,…how long it will take to reach a future value.…I will show you how to calculate…the number of investment periods required…to meet your goal.…We'll use the PDURATION function,…and we'll base it on the values…in my sample file Duration_01_09,…which you can find in the chapter one folder…of your exercise files collection.…
To calculate the period duration,…or PDURATION, of an investment,…we need to know three things.…The first is the annual interest rate…of 5% in this case.…We're gonna be compounding our interest monthly,…so we'll divide that by 12.…Next, in C4 is the present value,…that's the amount we start with,…and then we have the future value,…which is the amount we want to end up with.…And again our goal is to calculate the number of periods…that will be required to reach our goal.…
So I'll click cell C8,…type an = sign to start the formula,…
- Recall what the type argument is used to determine when using the PMT function.
- Identify what the M stands for in the ACCRINTM function.
- Name the accounting rules used by the AMORDEGRC function to assign a depreciation coefficient to an asset.
- Recall what internal rate of return generated by the IRR function should be measured against to determine if it is a good investment.
- List the three regular intervals that coupon bonds pay interest at.
- Determine the function that provides a more conservative bond evaluation compared to the DURATION function.
- Explain what the RECEIVED function shows.
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
Next steps1m 12s
- Mark as unwatched
- Mark all as unwatched
Are you sure you want to mark all the videos in this course as unwatched?
This will not affect your course history, your reports, or your certificates of completion for this course.Cancel
Take notes with your new membership!
Type in the entry box, then click Enter to save your note.
1:30Press on any video thumbnail to jump immediately to the timecode shown.
Notes are saved with you account but can also be exported as plain text, MS Word, PDF, Google Doc, or Evernote.