Time Value of Money Using Excel - 10 Examples
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- Опубликовано: 5 авг 2024
- This video shows common time value of money problems using Excel. Calculate the growth of investments, interest rates and car payments with the Excel financial functions.
Time Value of Money - A dollar today is worth more than a dollar in the future. There are two reasons this is true:
1. Inflation - prices rise and a dollar loses its value
2. Interest - dollars can earn interest over time
This video calculates the following time value of money variables in Excel.
💲 Future Value (FV) - a lump sum at the end of the problem
💲 Present Value (PV) - a lump sum at the beginning of the problem
💲 Payment (PMT) - a stream of equal payments over consistent periods, also called an annuity, the payments could be positive or negative
💲 Interest Rate (I/Y or RATE) - the annual interest rate
💲 Periods (N or NPER) - the number of periods, could be years, half-years, quarters, or months
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CHAPTERS
00:00 Time Value of Money Explained
03:37 Time Value of Money Variables
06:19 Excel vs TI BA II Plus Calculator
07:02 Solve for Future Value FV
14:13 Solve for Present Value PV
18:24 Solve for Payment PMT
24:04 Solve for Interest Rate RATE
28:15 Solve for Period NPER or N
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DISCLAIMERS & DISCLOSURES
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108 Subscribers 10/13/2020
What a great video, thank you so much. I've watched it twice and am getting the nuance of it (when a value is positive as opposed to negative). Again, thank you!
This is excellent! Thank you!
Nicely explained. Thanks :)
You’re a great teacher! Thank you!
I appreciate that! Thanks for watching.
Thank you Sir. Very well explained!!!
Thank you! Excel is great with TVM calculations.
Thank you so much. simply explained
Glad it was helpful! Thanks for watching.
Wonderfully Taught... Thank you sir
Thanks for watching. I appreciate your kind words.
Thanks
TMOV made easy! Thank you!
Glad it helped! Thanks for watching.
thank u, u save me
Glad this was helpful. Thanks for watching.
thank you
Thanks for watching! I hope it helped you.
Could you share the link to download the calculator?
Good day! First of all, thank you very much for sharing this useful video, I have exam tomorrow related to this topic, I think, now that I watched your video, I will do better! But I had one question, I wanted to clarify: why in the 9th exercise, we insert PV as a positive value? Didn't we put those 5000$ in our credit card? Wasn't it outflow as well?
Good luck on your exam!
On the credit card you borrow $5,000 so it is positive. Borrowing money is a cash inflow.
The $100 is negative because it is a cash outflow. Your payments are cash outflows.
@@FinallyLearn I understood! Thank you very much!!
Thanks, Nana, for sharing the video with us, it really helped me to understand these things.
And special gratitude for the teacher that explained comprehensively 👍🏻
i tried doing the same in google spreadsheet , why is there difference in answers ?
Thanks for the tutorial , I am wondering how do i access formula builder ?
The fx function on the formula bar. Thanks!
I am aware of the traditional formula builder , but yours looks different and it is on the side bar , I am using office 365 subscription
The Windows version is in the middle and is moveable. The Mac version is anchored on the right. Both work the same but look different. Thanks for watching.
With exercise number: 8
We we not supposed to divide the annual interest of 0.6% by 12 months instead of multiplying it as you have done?
We need to convert the 0.6% monthly rate to an annual rate of 7.21%. So, we multiply the monthly rate x 12. Thanks for watching! I hope this was helpful. Good luck.
@@FinallyLearn Much appreciated
for #2 can u just put the interest rate as .75 by doing 9/12 being the number of months
Yes it is 9% or 0.09 for the year. This is monthly, that is 9/12 or 0.75% or 0.0075.
Thank you!! But btw..for 3 im getting -1,472,017 ?
The payments are at the beginning of the period so you need a 1 in the Type variable. See the calculation when I showed your number first.
With exercise number: 6
I am getting PMT= -R196.45
That's if I don't change anything to make it a positive. If I may ask, why would you choose to make PV to be negative whereas that's money you've got saved. How is that a negative value?
I only get the same answer as you when I make that PV to be negative.
Present value and future value should have opposite signs. In number 6, present value is negative because it is an out of pocket cost. Future value is positive because you will receive that amount in the future. So you pay (-) the present value and you receive (+) the future value.
@@FinallyLearn Understood! Many thanks.
😂