IT APPLIED TO

MANAGEMENT
PREVIOUS CONCEPTS
Lending is a financial operation of loan
in which the lender delivers a quantity of
money to the borrower who receives it
and compromises to return the capital in
the agreed due day(s) or maturity
period.
The total payment will include the
interests stipulated (value of the
money) according to what is established
in the contract.
 PREVIOUS CONCEPTS
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
There are several systems of Amortization:

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.
Functions for Interest, Cash Flow & Investments
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 loan
IRR - Internal Rate of Return
INTRATE - Interest rate for a fully invested security
ISPMT - Interest Payment during a Specific period
NPER - Number of Periods 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
PAYMENT Function:
Calculates the payment of a loan based on constant payments and a
constant rate of interest.

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 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

Note: The returned payment includes the capital and the interest.
Nper Function:
Calculates the number of payments of a lending, based on constant,
periodic payments and with a rate of constant interest
Syntax NPER(rate;payment;va;vf;type)
Rate is the interest rate per period
Payment is 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
Vf is the future value or a balance in cash that you want to
accomplish 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
 IPMT Function:
Calculates the interest paid in a specific period for an investment based on a
rate 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 to
accomplish 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