Formula
A
Annuity, or Payment fora loan based on uniformpayments and a con-stant interest rate
i
Interest per year (%)
n
Period (years)
m
Interest compoundingfrequency
F
Future value (Futureworth)
P
Present value(Present worth)
EquationNumber(20.13) (20.15) (20.17)
Excel Financial Function
PMT(Rate,Nper,Pv,Fv,Type)
PMT Payment for a loan based onconstant payments and aconstant interest rate
Rate Interest rate per periodNper Total number of payment
periods in an annuity
Pv
Present value (Present worth)
Fv
Future value (Future worth)
Type Number 0 or 1 and indicates
when payments are due.If type is omitted, it isassumed to be 0.(0: at the end of the period, 1:at the beginingof the period)
Investment or payment is described asnegative number and income isdescribed as positive number.
Example /
Section
Section 20.7Example 20.7 Example 20.8How to Use Excel to Solve the Example Problem
PMT(0.065,5,0,2000)
351.27
PMT(0.065/12,5*12,0,2000)
28.30
PMT(0.08/12,5*12,10000)
202.76
Data for the Example in Section 20.9
Alternative A
Initial cost
100,000
Salvage value after 10 years
10,000
Operating cost per year
2,500
Maintenance cost per year
1,000
Alternative B
Initial cost
85,000
Salvage value after 10 years
5,000
Operating cost per year
3,400
Maintenance cost per year
1200
Example 20.10 Section 20.9
PV(0.08, 4,1000)+PV(0.08,5,0,3000)
PV(0.08,7,0,5000)
8,271.33
PW
100000
PV(0.08,10,
(2500
1000))
PV(0.08,10,0,
118,853.35
AW
(2500
PMT(0.08,10,
PMT(0.08,10,0,
17,712.65
FW
10000
FV(0.08,10,0,
FV(0.08,10,
(2500
1000))
256,595.47
PW
85000
PV(0.08,10,
(3400
1200))
PV(0.08,10,0,
113,550.41
AW
(3400
PMT(0.08,10,
PMT(0.08,10,0,
16,922.36
FW
5000
FV(0.08,10,0,
FV(0.08,10,
(3400
1200))
245,146.81
677
TABLE 20.11
Example of Excel’s Financial Functions and How They May be Used (
continued
)
A
F
≥i m
a
1
i m
b
1 m2 1 n2
1
¥
A
P
≥a
i m
ba
1
i m
b
nma
1
i m
b
nm1
¥
A
F
ci
11
i^2
n1
d
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