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If you want Excel to calculate something for you, you first must type-in an "=" sign. Type in the following statement in cell C7 below: 7 Other basic math operators in Excel are: subtraction: multiplication: division: =5+2 then press the Enter key.

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You can type-in specific numbers into Excel and use it as a calculator, but Excel is at its best when you m The following illustrates a basic formula: Use this application to determine the area of a rectangular shaped room. Length Width Area = 12 3 36

Formulas are a better use of Excel's abilities because you can make changes to the input values and Excel can instantly recalculate an answer for you. This is quite valuable when the formulas become more complex.

The following application is nearly completed. Click on cell C35 to create a formula to compute si Principle Rate Time (years) Interest = $500.00 3.00% 4 $60.00 ^

How are exponents handled in Excel? The carat symbol is used: For example, type-in this: =5^2 25

into cell C41, then press the Enter key.

Complete the following application so that the base is raised to a power. Base Exponent Answer = 4 3 64 .

at its best when you make formulas. e input values the formulas ormula to compute simple interest. .

54 $1.70 Compounding Period 1 Compounding Period 2 Compounding Period 3 Compounding Period 4 Compounding Period 5 Compounding Period 6 .46 $0.91 $2.57 $0.Use the Simple Interest Formula Principal $1.36 $2.Compound Interest It is possible to use a spreadsheet to compute compound interest.37 $0.24 $0. We will use the template below to do this: Method 1 .00 $1.30 $0.24 $1.93 Rate 24% 24% 24% 24% 24% 24% I PRT Time 1 1 1 1 1 1 Interest Earned $0.

4.) = Interest Earned = 1.25% .26 0.00 24. M P 1 i n Recall that: P is the Principle (amount invested) i is the interest rate per compounding period n is the number of compounding periods The following application is used to determine the interest earned when money is invested in an account Principle Interest Rate Compounded How Often/Year Term (Years) Compound Amount (Princ. or 365) 1 1.00% 4 (Valid Inputs: 1.26 ###### 24.00% 4 3 ###### ###### -2500 26. & Int. 2.Compound Interest Method 2 .Use the Compound Interest Formula You can use the compound interest formula found in your textbook to determine both the compound amount and the interest earned. 12.

00% 1 3 ###### ###### 0 ###### 24.00% 1 3 ###### ###### 0 ###### 24.030.00% 1 3 ###### ###### 5. ###### 24.nvested in an account where interest is compounded.49 .

This number is also called the principle. Knowing when to use positive and negative numbers: Since Excel uses the same functions whether you are calculating investments or loans. Number of Payment Periods (NPER) The total number of payment periods between the present value and the future value of an investment or loan. The rules of thumb are as follows: If it's money that is leaving your hands. the number should be ne If it's money that's coming to you.Finance Terminology Present Value (PV) The value of an investment or loan at the very beginning of its life. Payment (PMT) An amount of money that's being contributed to an investment or loan. a typical investment might have an annual interest rate of 5%. Future Value (FV) The amount of an investment or loan at some point in the future. which means that after one year. For example. the big thing to remember is whether to use positive or negative numbers. whether you're receiving a loan or an investment that's matured. It's a regular contribution that's usually made at the same time the interest is calculated. whether it's a deposit to an account or a payment for a loan. the number should be pos . For example. if you've got a three-year car loan (payments due monthly) the NPER equals 36…in other words there are 12 payment periods each year. for three years. Rate The rate at which an investment or loan will increase or decrease. the future value will be 5% larger than the present value.

d. the number should be positive. the number should be negative. .ng to remember an.

pv is the present value. the payment is made at the beginning of the period which gives your interest just a bit more time to compound.512.511.[pv].61 .nper.000 investment after one year earning 5% annual interest? $10.62 3) What is the compound amount (fv) of a $10. If you omit this value.000 investment after one year where 5% interest is compo $10. or the intitial balance of your account. Excel assumes you start with nothing.618.500. If you are making regular contributions. if the money is in the account for $11. Sample Problems w/ Investments 1) What is the compound amout (future value) of a $10.67 4) What is the what is compound amount of the investment in Sample Problem 3. if interest is paid monthly to your account and you invest for a two year period nper will be 24 (2 x 12 =24). type indicates the timing of the payment. For example. As a result you'll need to include something other than 0 for the payment. If you specify 0 (or omit it completely) the payment is made at the end of the period.22 5) What is the compound amount of a $400 investment after 10 years if the interest is 2.Using the FV function for Savings Accounts FV(rate.5% compounded daily? $513. If you specify 1.[type]) rate is the interest rate your investment is earning nper is number of interest payments. this value also specifies the number of contributions you are making.00 2) What is the compound amount (future value) of a $10. Set this to 0 if you don't want to add anything.000 investment after one year where 5% is compounded daily? $10. payment is the amount of the contribution you want to make regularly.payment.

82 $ .219.00 1% 5 365 (number of times interest is compounded per year) (additional periodic additions to the account.82 $12.6) What is the compound amount of a $1. Years Investe Principal Interest Rate Years Invested Payments/Year Contribution Future Value = Interest Earned = $250. Interest Rate.89 7) The following illustrates a general FV application where the user can input: Principal.000 investment after 4 years if the interest is 5% compounded quarterly? $1. We'll leave this as 0 for now) $262.

one year earning 5% annual interest? r one year where 5% interest is compounded monthly? where 5% is compounded daily? m 3.5% compounded daily? . if the money is in the account for three years? nterest is 2.

Interest Rate. nt. Contribution. Payments/Year. We'll leave this as 0 for now) . Years Invested.nterest is 5% compounded quarterly? Principal.

if you make payments of $500 per month (paying $50 extra e ($68. If you specify 1. or the intitial balance of your account.32) 4) The following illustrates an application that will compute FV for a loan scenario. If you specify 0 (or omit it completely) the payment is made at the end of the period. Monthly Payment.374.01) 3) What would be the balance for Sample Problem 2.343. payment is the amount of the contribution you want to make regularly.00 $150.908.[pv]. If you omit this value.500.5% interest (calculated monthly) after making payments of ($71. this value also specifies the number of contributions you are making.nper. User inputs are: Loan Amount. pv is the present value. Sample Problems w/ Loans 1) What is the balance remaining on $10. Excel assumes you start with nothing. Time (yrs): Loan Amount Monthly Payment Interest Rate Time (years) $3. the payment is made at the beginning of the period which gives your interest just a bit more time to compound.000 loan at 6.[type]) rate is the interest rate your investment is earning nper is number of interest payments. If you are making regular contributions. type indicates the timing of the payment.Using the FV function for Loans FV(rate.00% 2 . if interest is paid monthly to your account and you invest for a two year period nper will be 24 (2 x 12 =24). As a result you'll need to include something other than 0 for the payment. For example.payment.24) 2) What is the balance remaining on a $75.00 5. Interest Rate. Set this to 0 if you don't want to add anything.000 loan at 7% interest (calculated monthly) after making payments of $20 ($4.

Balance Remaining ($89.41) .

.onthly) after making payments of $200/month for three years? d monthly) after making payments of $450/month for five years? $500 per month (paying $50 extra each month).

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