Práctica 2.5

Understanding Financial Functions in Excel

Overview of Financial Functions

• The discussion begins with an introduction to financial functions in Excel, emphasizing the importance of understanding these functions for effective financial management.

• Key components of the payment function are outlined: interest rate (tasa), total number of payments (nper), present value (bea), future value (ef), and type (tipo).

Payment Function Details

• The payment function is explained, highlighting how it calculates loan payments based on different parameters. It distinguishes between two types: type 0 (payments at the end of the period) and type 1 (payments at the beginning).

• An example calculation is provided for a loan, demonstrating how to input values into the payment function to derive monthly payments.

Loan Calculation Examples

• The first loan's monthly payment is calculated as $928.57, indicating a cash outflow since it's a negative value.

• A second loan example shows a slightly higher monthly payment of $920.51 due to differences in payment timing.

Savings Calculation Using Payment Function

• The process for calculating savings through monthly contributions is discussed, using a target amount ($20,000) over ten years with an interest rate of 6.5%.

• Monthly savings required are calculated as $227, illustrating how the payment function can also be used for savings goals.

Interest Payment Calculations

• Introduction to calculating interest payments using the "pago int" formula; this helps determine interest paid on loans during specific periods.

• Example calculations show how to find interest amounts for both initial and final payments on loans.

Capital Payments and NPR Function

• Explanation of "pago print," which calculates capital repayments on investments over time based on constant periodic payments.

• Discussion about the NPR function that determines the number of payments needed based on fixed periodic payments and other variables like interest rates.

This structured overview provides insights into various financial functions available in Excel, focusing primarily on their application in calculating loans, savings, and investment repayments.

Calculating Interest Rates and Payment Simulation

Understanding Interest Rate Calculation

• The interest rate calculation involves several components: the number of payments, present value, future value, type of payment, and an estimation factor. If the estimation is omitted, a default interest rate of 10% is assumed.

• To calculate the monthly interest rate, one must consider the total number of payments (15 in this case). The formula includes present value and future value but leaves the type unspecified for simplicity.

• The calculated monthly interest rate is approximately 0.88%. To find the annual interest rate, it can be multiplied by 12 to yield an annual rate of about 10.5%.

Simulating Payment Tables

• Participants are tasked with simulating a payment table where fixed payments remain constant across periods (e.g., $500 from first to fifteenth payment).

• The first payment should be less than subsequent ones while ensuring that the final payment reflects all accrued interests. Balances must be adjusted accordingly to ensure they reach zero at completion.

Conclusion

This session emphasizes understanding how to calculate interest rates and simulate loan repayment schedules effectively. Any questions regarding these processes should be directed for clarification.