You can also divide the interest rate by the

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Unformatted text preview: t data file structure so the sum function discussed under the “Cumulative Payments To Principle” section was utilized in column I of the “Balloon Payment Loan” worksheet. This formula can be seen in column I of the “Loan” worksheet of the data file. Page 96 Solving Accounting Principles Problems Using Excel for Windows Present Value Excel has a very powerful and easy to utilize formula for present value calculations under the title of “PV” in the financial category. This single formula will handle present value calculations of single sums or annuities as well as adjust them for payment at the beginning or the end of the period. The inserted screen print shows the “PV” (Present Value) dialog box. The “Present Value” worksheet in the “Time Value Of Money” data file on the data disk has numerous examples of this formula. The basic formula is =PV(Period interest, Number of periods, Amount of each payments, Future value, Payment at the beginning or the end of the period) with payment at the end of the period indicated by a 0 (zero) and payment at the beginning of the period indicated by a 1 (one). Leaving the “Type” (Payment type) window empty causes Excel to default to payment at the end of the period. By omitting the value for payments in the “PMT”, or by placing a 0 (zero)(best action), in the window, and providing the “PV” dialog box or formula a “FV” (Future value), the formula will produce the present value of a single sum. By placing the amount of an individual payment of an annuity in the “PMT” (Payment window), the formula will produce the present value of an annuity. For annuities due place a 1 (one) in the “Type” window to indicate payment at the beginning of the period, for an ordinary annuity, place a 0 (zero) in the “Type” window or leave it blank to indicate payments at the end of the period. Hints and Tips on utilizing the dialog box – First, if you establish the data matrix as shown on the “Present Value” worksheet in cells A1 thr...
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