Works: Accuracy of Financial Functions

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

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MACINTOSH

The information in this article applies to: |

- Microsoft Works for the Macintosh, versions 1.0, 1.1, and 2.0 |

# 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%/12,4*12,0,-10000) $14,314.05 Daily =FV(9%/365,4*365,0,-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.