In the previous video, I showed you how to calculate the interest rate behind an investment. In this video, I’ll show you how to discover the amount you’ll receive when you know the length of the investment and its interest rate. To make this calculation, you’ll use the information I just listed and the RECEIVED function.
- [Instructor] When you make an investment…in which you are fully vested, that is,…you'll receive the entire proceeds of the investment,…you can calculate the economic value of that investment…using several different arguments.…In this movie, I will show you how…to use the received function to calculate…the economic value of an investment.…The sample file is ValueAtMaturity_05_03…and you can find it in the chapter five folder…of your exercise files collection.…The scenario I'm presenting here is that…you have a security such as a bond…and you have a settlement date,…in this case we're assuming you purchased it…on July 13, 2016.…
The maturity date of December 5, 2019.…That you're investing $100,…and that the discount rate, that is,…the amount that you could get investing…with almost zero risk, is 5.75%.…And also using a basis argument of one,…that all interest is compounded at the end of a period.…So let's click in cell C9…and create the formula that we need to use.…
So I'll type equal and the function is received.…
- 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
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