74 are necessary input 6000 function pv 4 n 10 i cpt

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Unformatted text preview: column 4) increases. This pattern is typical of amortized loans; as the principal is reduced, the interest component declines, leaving a larger portion of each subsequent loan payment to repay principal. Spreadsheet Use The annual payment to repay the loan also can be calculated as shown on the first Excel spreadsheet. The amortization schedule allocating each loan payment to interest and principal also can be calculated precisely as shown on the second spreadsheet. CHAPTER 4 Time Value of Money 163 Interest or Growth Rates It is often necessary to calculate the compound annual interest or growth rate (that is, the annual rate of change in values) of a series of cash flows. Examples include finding the interest rate on a loan, the rate of growth in sales, and the rate of growth in earnings. In doing this, we can use either future value or present value interest factors. The use of present value interest factors is described in this section. The simplest situation is one in which a person wishes to find the rate of interest or...
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This document was uploaded on 03/03/2014 for the course MBA BMMF at Open University Malaysia.

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