Microsoft KB Archive/40300

Works: Accuracy of Financial Functions

PSS ID Number: Q40300 Article last modified on 06-10-1996

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MACINTOSH

= SUMMARY =

The compounded period used in calculating financial functions can be altered by changing the number of periods over which the function is calculated. For example, a 4-year loan compounded monthly would have 48 periods (4 years times 12 months). The rate is entered as the rate for each period.

For example, to calculate a 9-percent annual interest rate compounded monthly, enter the monthly interest rate, which in this example is .75 percent (9 percent divided by 12 months). To calculate the future value (four years from now) of $10,000 at 9 percent, the following results will be obtained:

Compounded Period Formula Result —————– ——- ——

Monthly =FV(9%/12,412,0,-10000) $14,314.05 Daily =FV(9%/365,4365,0,-10000) $14,332.66

= MORE INFORMATION =

This information regarding the number of periods is true for all the Microsoft Works financial functions that take a percentage rate as an argument. Functions that use this argument include the following:

FV, IRR, MIRR, NPER, NPV, PMT, PV, RATE

KBCategory: kbusage KBSubcategory: macworkskb

= Additional reference words: 1.00 1.10 2.00 mksss moveart =

Copyright Microsoft Corporation 1996.