Maestro

Working with Future Value

The concept of future value is quite simple and is based on the fact that a given amount of money received today will be worth more at some time in the future. It’s easy to understand why this is true—money you have now can be invested and earn interest, hence its value increases....

Maestro

Calculating Principal Payments (2)

The PPMT function uses the following syntax; you’ll note that most of the arguments are the same as for the PMT function: PMT(rate, per, nper, prin, [fv, type]) The first four arguments are required. They are rate is the interest rate for the loan....

Maestro

Calculating Principal Payments

When you make a payment on a loan, each payment is divided into two parts: Part of the payment is for that month’s interest charge. The remainder of the payment goes toward paying down the principal. Each month you pay down the loan balance, or principal, by some amount. This means that the next month the interest charge will be less because the charge is calculated as the interest rate...

Maestro

Calculating Loan Payments (3)

In most situations you omit both of these optional arguments. Let’s create a simple loan calculator using the PMT function. Start with a blank worksheet and then follow these steps: Put the labels Amount of loan, Annual rate, Term in years, and Monthly payment in cells B2 through B5, in order....

Maestro

Calculating Loan Payments (2)

The PMT function uses the following syntax: PMT(rate, nper, prin, [fv, type]) The first three arguments are required. They are rate is the interest rate for the loan....