Let us learn 5 Excel functions that are useful for personal finance
Function 1 - PV
Karthik is planning to visit Europe in 5 year on estimated expense of 15 lakhs. How much he need to invest now in lumpsum?
For this planning, before using Excel, we should better understand the factors/variables that have been used in the Excel function and correctly enter the numbers by input for those functions. The factors used in the Excel distribution FV and in most of the financial functions, are given below
- "Rate" refers to rate of interest .
- "Nper" refers to the number of months / year in which the amount is paid in the SIP.
- The PMT is The amount of money we pay monthly.
- PV is the initial sum paid.
- FV is the amount available / received at the end.
- "Type" is often taken as zero or one. (If the interest is paid upfront or at the end of the period)
To know the present amount by PV: the interest rate is 10%, the period is 5 years and the value is 15 lakhs.
Using PV function we are arriving the amount required currently.
Used factors / variable:
Information to input:
If you submit the required inputs as shown above, the excel will calculate
the PV. Here we get that the amount to be saved now for planned expenses is Rs
9,31,381.
You can understand how to enter the Excel role by looking at the following
picture. In your computer, the cell number / reference may be different, but
the input information must be exactly as shown in the picture with respect to
variable as given in the problem.
Please click here to get the working model of this function in google sheet – you can try hands
on using different variables suitable to your requirements.
Click here to read the NEXT article about using FV function: Radha thinks he can buy a house in 10 years. Current price is 40 lakhs. Expected Inflation is 7%. Then how much money should he save now to buy a house in ten years?
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