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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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 Fall '10
 Ullmann
 Accounting

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