Basic Financial Calculations

MGT 4850

Spring 2008

University of Lethbridge

Topics

• http://www.santafe.edu/education/csss/csss08/programinfo.php

• Net Present Value

• Internal Rate of Return

• Future Value

• Pension and accumulation problem

• Continuously Compounded Interest

PV and NPV

     

Discount rate 10%  

Present value $379.08 <-- =NPV(B2,B7:B11)

     

  Cash  

Year flow  

1 100  

2 100  

3 100  

4 100  

5 100  

Exact NPV problem in Excel

Discount rate 10%    

Net present value -20.92 <-- =G7+NPV(G2,G8:G12)  

       

  Cash    

Year flow    

0 -400    

1 100    

2 100    

3 100    

4 100    

5 100    

IRR

IRR 7.931% <-- =IRR(B19:B24)

NPV -20.92  For discount rate 10%

  Cash  

Year flow  

0 -400  

1 100  

2 100  

3 100  

4 100  

5 100  

Loan amortization

Loan amortization 2

1 step calculate IRR

Multiple Internal Rates of Return

Discount rate 6%    

NPV -3.99 <-- =NPV(B3,B9:B13)+B8  

       

  Cash    

Year flow    

0 -145    

1 100    

2 100    

3 100    

4 100    

5 -275    

Multiple Internal Rates of Return

Table

• Highlight the table area

• Activate the command Data/Table

Bond Cash Flows

Loan Amortzation

Future Value Problems

FV

Annuity problems

Compounding periodsContinuous compounding

Continuous discounting

Continuous Return