Book Image

Excel 2010 Financials Cookbook

By : Andre Odnoha
Book Image

Excel 2010 Financials Cookbook

By: Andre Odnoha

Overview of this book

<p>Excel is one of the mostused software tools in the world and just about every business has a copy somewhere. Despite its power and flexibility it is not always clear how to use it to perform some of the most important tasks in any business: organizing, analysing, and presenting financial information.<br /><br />Excel 2010 Financials Cookbook contains a rich collection of useful techniques for handling financial data in Excel. From integrating data from a variety of different sources, through organazing and analyzing financial data, to presenting it in a variety of graphical forms, this book has you covered.<br /><br />The book deals first with "normalizing" financial data -- that is, bringing data from a number of different sources into a single format where you can analyze them together. Then you'll learn techniques for managing and analyzing the data before discovering ways to present it graphically. The book then looks at Excel's built in features for financial analysis, and even shows how you can combine the built in features to build your own analysis functions.</p>
Table of Contents (14 chapters)
Excel 2010 Financials Cookbook
Credits
About the Author
About the Reviewers
www.PacktPub.com
Preface
Index

Analyzing benefits between interest and payment investments


Determining the interest and principal of a loan over the course of the life of the loan is an important function to assist in making decisions of whether the use of a loan is a good use of capital.

As a financial manager, you have $100,000 to spend on the purchase of land to be developed. Although you have the money to purchase the land, we must forecast the potential return on investment in the purchase and whether purchasing via a loan presents a better return. In five years, the land will potentially appreciate approximately $15,000.

In this recipe, you will learn to use Excel interest and payment functions to determine the amount of interest and payments you will pay within a loan for a specific amount of time.

How to do it...

First, we will need to gather the parameters of the loan:

  1. 1. Enter principal and interest as shown in the following screenshot (we will assume a 4.5% fixed interest rate):

    Next, we will assume a 20-year term...