6th week finantial functions 1

8/8/2019 6TH WEEK Finantial Functions 1

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IT APPLIED TO

MANAGEMENT


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PREVIOUS CONCEPTS

Lending is a financial operation ofloan

in which the lenderdelivers a quantity of

money to the borrowerwho receives itand compromises to return the capital in

the agreed due day(s) or maturity

period.

The total payment will include theinterests stipulated (value of the

money) according to what is established

in the contract.


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PAYMENTS : Quotas or periodic amount that the

borrower pay to the lender to reimburse the initial capital

and interests earned along the life of the loan.

AMORTIZATION: Are the partial payments of the initical

debt. The sum of these payments in the moment of the

cancellation is equal to the given capital.

INTEREST RATE: The rate at which interest is paid by a

borrower for the use of money that he borrow from a

lender.

PREVIOUS CONCEPTS


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There are several systems ofAmortization:

French system: The payment is fixed, the capital

amortization is progressive as periods of time pass by,

whereas the interests decrease.

German system: The amortization is fixed, therefore

the interests and the total payment will be diminishing.American system: There is a single amortization at the

end of the period; in every payment only interests are

paid.

PREVIOUS CONCEPTS


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CUMIPMT - Cumulative Interest Payment

CUMPRINC - Cumulative Principal

EFFECT - Effective annual interest rate

FV - Future Value of an investment

IPMT - Interest Payment for an investment or loanIRR - Internal Rate ofReturn

INTRATE - Interest rate for a fully invested security

ISPMT - Interest Payment during a Specific period

NPER - Number ofPeriods for an investment or loan

NPV - Net Present Value formula

PMT - Periodic Payment for an annuity

PPMT - Payment on the Principal for an annuity or loan

RATE - Interest rate per period

Functions for Interest, Cash Flow & Investments


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PAYMENT Function:Calculates the payment ofa loan based on constant payments and a

constant rate ofinterest.

Syntax PMT(rate;nper;va;vf;type)

Rate : is the interest rate of the loan

Nper: is the total number of payments of the loan

Va: is the actual value or what currently cost the sum of the series of

future payments, also known as the principal

Vf: is the future value that you want to accomplish after effecting the

last payment. If the argument Vf is omitted, it is assumed that the valueis 0 (meaning that the future value of a loan is 0).

Type : is a number 0 or 1 and indicates the expiration of payments

Type :0 at the end of the period

Type :1 at the beginning of the period

Note:The returned payment includes the capital and the interest.


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Calculates the number of payments of a lending, based on constant,

periodic payments and with a rate of constant interest

SyntaxNPER(rate;payment;va;vf;type)

Rate is the interest rate per period

Paymentis the effected payment in every period, it should remain

constant during the life of the annuity

Va is the actual value or what currently cost the sum of the series of

future payments

Vfis the future value or a balance in cash that you want to

accomplish after effecting the last payment. If the argument vf isomitted, it is assumed that the value is 0 (meaning that the future

value of a loan is 0).

Type: is a number 0 or 1 and indicates the expiration of payments

Type: 0 at the end of the period

Type: 1 at the beginning of the period

Nper Function:


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I T F cti :Calculates the interest paid in a specific period for an investment based on arate of constant interest and payments on constant periods

Syntax IPMT(rate;period;nper;va;vf;type)

Rate: is the interest rate of the period

Period: is the period for which we calculate the interest and

must be between 1 and the argument Nper

Nper: is the total number of payments of the lending in an annuity

Va: is the actual value of a series of future payments

Vf: is the future value or a balance in cash that you want toaccomplish after effecting the last payment. If the argument vf is

omitted, it is assumed that the value is 0 (meaning that the future

value of a loan is 0).

Type: is a number 0 or 1 and indicates the expiration of payments

Type: 0 at the end of the period

Type: 1 at the beginning of the period

6th week finantial functions 1

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