Saturday, July 26, 2008
Creating Time Value of Money Tables in Excel
If you have ever taken a finance or accounting course, then you may remember using tables from the back of the book to solve time value of money problems. These tables (called PVIF, PVIFA, FVIF, and FVIFA) are falling out of use due to the use of financial calculators and spreadsheets, but they are still being used in some places. I know, because I get requests occasionally for them and I often see people searching my site for them. So, since my site is all about the time value of money, I figured it was about time that I put together a tutorial on how to create these TVM tables using
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Sunday, September 23, 2007
Display Scenarios Using a Drop-Down List
In my finance classes at Metro State, I frequently use Excel as a presentation program. I prefer it to PowerPoint because it allows me to do a live demonstration of concepts, rather than showing static slides with static pictures.
One tool that is very often useful is Excel’s Scenario Manager. If you aren’t familiar with it, the Scenario Manager is a tool that lets you specify values to place into certain cells when you choose to display a scenario. So, you can have one worksheet, but display any of several scenarios (best base, base case, worst case, etc). The problem with this tool is
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Tuesday, June 19, 2007
The NPV Function Doesn’t Calculate Net Present Value
One of the things that has always driven me nuts (because I have to repeatedly explain it in class) is that the NPV function in spreadsheets doesn’t really calculate NPV. Instead, despite the word “net,” the NPV function is really just a present value of uneven cash flow function. It has always been this way, so I’ve learned to live with it. I suspect that this goes all the way back to Visicalc (which you can download and run in a DOS window).
Net present value is defined as the present value of the expected future cash flows less the initial cost of the investment. “Net” always means
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Monday, June 11, 2007
On Arrays and Accumulated Depreciation
What could be easier, or more common, than calculating accumulated depreciation? Generally, in your spreadsheets you probably have each years’ depreciation expense listed in its own cell and all you do is add them up. Nothing wrong with that, but there is another way.
I like to read the forums over at AnandTech and help out whenever I can. Not long ago, a user asked about calculating accumulated depreciation using the DDB (double-declining balance) function. He needed to calculate the accumulated depreciation to date for an asset so that the book value could be calculated. My solution was
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