1.
Future Value (FV)
Formula:
n
F V = P V × (1 + r)
Where: - F V = Future Value
PV = Present Value (initial investment)
r = Interest rate per period
n = Number of periods
Excel Formula: =FV(rate, nper, pmt, pv, type)
Explanation of Excel Fields:
rate = Interest rate per period
nper = Number of periods
pmt = Payment made each period (optional, set to 0 if no payments)
pv = Present Value (initial investment, should be entered as negative)
type = Payment timing (0 for end of period, 1 for beginning of period)
2. Present Value (PV)
Formula:
FV
PV =
n
(1 + r)
Where: - P V = Present Value (current value of future cash flows)
FV = Future Value
r = Interest rate per period
n = Number of periods
Excel Formula: =PV(rate, nper, pmt, fv, type)
Explanation of Excel Fields:
rate = Interest rate per period
nper = Number of periods
pmt = Payment made each period (optional, set to 0 if no payments)
fv = Future Value
type = Payment timing (0 for end of period, 1 for beginning of period)
3. Net Present Value (NPV)
Formula:
n
Ct
NPV = ∑ − C0
(1 + r) t
t=1
Where: - C = Cash flow in period t
t
r = Discount rate
t = Time period
C0 = Initial investment
Excel Formula: =NPV(rate, value1, [value2], ...) + initial_investment
Explanation of Excel Fields:
rate = Discount rate
value1, value2, ... = Cash flows in different periods
initial_investment = The initial investment or cash flow (must be added separately to
the NPV result as Excel assumes cash flows are from period 1 onward)
4. Internal Rate of Return (IRR)
Formula:
n
Ct
C0 = ∑
t
(1 + I RR)
t=0
Where: - C = Cash flow in period t
t
I RR = Internal Rate of Return
t = Time period
C0 = Initial investment
Excel Formula: =IRR(values)
Explanation of Excel Fields:
values = Array or range of cash flows (including the initial investment as a negative
number)
5. Loan Payment (PMT)
Formula:
PV × r
P MT =
−n
1 − (1 + r)
Where: - P M T = Loan payment amount per period
PV = Present Value (loan amount)
r = Interest rate per period
n = Number of periods
Excel Formula: =PMT(rate, nper, pv, fv, type)
Explanation of Excel Fields:
rate = Interest rate per period
nper = Number of periods
pv = Present Value (loan amount, should be entered as negative)
fv = Future Value (optional, set to 0 if not used)
type = Payment timing (0 for end of period, 1 for beginning of period)
6. Future Value of an Annuity (FVA)
Formula:
n
(1 + r) − 1
F VA = P M T ×
r
Where:
FV A = Future Value of an Annuity
P MT = Payment per period
r = Interest rate per period
n = Number of periods
Excel Formula: =FV(rate, nper, pmt, pv, type)
Explanation: Same as general FV function, but pmt is now used.
7. Present Value of an Annuity (PVA)
Formula:
−n
1 − (1 + r)
P V A = P MT ×
r
Where:
PV A = Present Value of an Annuity
P MT = Payment per period
r = Interest rate per period
n = Number of periods
Excel Formula: =PV(rate, nper, pmt, fv, type)
Explanation: Same as general PV function, but pmt is now used.
8. Effective Annual Rate (EAR)
Formula:
i n
EAR = (1 + ) − 1
n
Where:
EAR = Effective Annual Rate
i = Nominal interest rate (annual)
n = Number of compounding periods per year
Excel Formula:
=EFFECT(nominal_rate, npery)
Explanation of Excel Fields:
nominal_rate = Nominal interest rate (annual)
npery = Number of compounding periods per year
9. Nominal Interest Rate from EAR
Formula:
1
i = n × ((1 + EAR) n
− 1)
Where:
i = Nominal interest rate (annual)
EAR = Effective Annual Rate
n = Number of compounding periods per year
Excel Formula:
=NOMINAL(effect_rate, npery)
Explanation of Excel Fields:
effect_rate = Effective Annual Rate (EAR)
npery = Number of compounding periods per year
Summary Table
Concept Math Formula Excel Formula
Effective Annual Rate =EFFECT(nominal_rate,
i
(EAR) EAR = (1 + )
n
− 1 npery)
n
Nominal Interest Rate 1
=NOMINAL(effect_rate,
from EAR i = n × ((1 + EAR) n
− 1) npery)
Concept Math Formula Excel Formula
Future Value (FV) n
=FV(rate, nper, pmt, pv, type)
F V = P V × (1 + r)
Present Value =PV(rate, nper, pmt, fv, type)
FV
(PV) PV =
n
(1 + r)
Net Present =NPV(rate, value1, [value2],
n
Value (NPV) NPV = ∑
Ct
− C0
...) + initial_investment
(1 + r) t
t=1
Internal Rate of =IRR(values)
n
Return (IRR) 0 = ∑
Ct
t
(1 + I RR)
t=0
Loan Payment =PMT(rate, nper, pv, fv, type)
PV × r
(PMT) P MT =
−n
1 − (1 + r)
Future Value of n
=FV(rate, nper, pmt, pv, type)
(1 + r) − 1
Annuity (FVA) F V A = P MT ×
r
Concept Math Formula Excel Formula
Present Value of −n
=PV(rate, nper, pmt, fv, type)
1 − (1 + r)
Annuity (PVA) P V A = P MT ×
r