Most loans, whether between businesses or made by businesses to individual borrowers, are fully amortized. “Fully amoritzed” means that the monthly payments made over the term of the loan pay off the principal and all accrued interest. In Excel, you can calculate the monthly payments required to pay off a fully amortized loan using the PMT function.
- [Voiceover] Very few businesses are able…to perform all of their operations…using their own money.…Instead, they often need to sell stock…or take out bank loans, or both.…Most loans, whether between businesses…or made by businesses to individual borrowers,…are fully amortized.…Fully amortized means that the monthly payments…made over the term of the loan…pay off the principal and all accrued interest.…In Excel, you can calculate the monthly payments…required to pay off a fully amortized loan…using the PMT, or payment function.…
I'll demonstrate how to use the PMT function in this movie.…My sample file is LoanPayment_01_01,…and you can find it in the chapter one folder…of your exercise files collection.…The PMT function takes five arguments.…The first three arguments, which are rate,…shown here in C3, the number of periods…or number of payments, shown in C4,…and the present value of the loan,…which is shown in C5.…Those three arguments are required.…
Rate is the interest rate, number of periods…is the number of payments,…
- Define NPER.
- Determine the appropriate method of depreciation to use on tax returns.
- Recall which function is used to evaluate a fixed-rate investment or an annuity that makes periodic payments to the beneficiary.
- Identify the term for the rate of return earned from a zero-risk investment.
- Explain the purpose of the XNPV function.
- Recognize the type of bond that pays interest before it matures.
- Name three arguments needed to use the TBILLYIELD function.
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. Calculating Prices and Yields of Securities with Odd Periods
Additional resources1m 24s
- 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.