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,…
- 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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