By Kardi Teknomo, PhD.

Financial Analysis

<Previous | Next | Content >

Financial Analysis

Time is money, people said. Upon loading the personal finance software you just purchased, it probably becomes apparent that time is money. If you put your money in the bank, you gain interest. If you borrow money from the bank or money lender, you need to pay interest. If you have $10,000 at the beginning of this year, you put in the bank that will give you 1% interest per year; you will get $10,100 at the beginning of next year. This means that your money now has bigger value than the same amount of money in the future.

The tutorial below contains the summary of most useful financial analysis.


Let Financial Analysisis the amount of money you have at present and Financial Analysisis the amount of money you have in the future. Let Financial Analysisbe the interest rate per year and Financial Analysisis the total number of year you invested your money.

Financial Analysis

If you invest your money for a year, you have Financial Analysis

If you invest your money for 2 years, you have

Financial Analysis

If you invest your money for Financial Analysisyears, you have compounding formula

Financial Analysis (1)

Of course if you already get the money that you invested Financial Analysisyears ago at the same rate of interest, you can also calculate how much you money was before by discounting formula:

Financial Analysis (2)

Suppose you know the amount of money at present and future, and you want to know how much the interest rate is, you may use this formula

Financial Analysis (3)

If you would like to know the periods (how many years) you need to wait to get a certain amount in the future, the following formula may help:

Financial Analysis (4)

Suppose you want to take some loan to the bank or money lender for your project or to buy car or house. You receive your loan now and then you need to pay the principal of the loan plus interest for Financial Analysisyears. Starting from next year, you need to pay Financial Analysisamount of money every year. How much your annuity payment is? Formula below may help you:

Financial Analysis (5)

Financial Analysis

 

Some insurance company may ask you to pay every year certain amount of money Financial Analysisfor Financial Analysisyears and in the future they will give you big amount of money Financial Analysis.

Financial Analysis

 

Financial Analysis (6)

For the project that you or developers or government do, at least you need to calculate whether that project is feasible financially and economically. Since the value of money is changing over time, we need the same basis to make the calculation equivalent. You may convert all the money as present value, or as future value, or as annuity. MS Excel functions for financial analysis below are the discrete compounding factor table converter below to help you.

Table Summary of Financial Converter

Given

Find

Formula

MS Excel Function 3)

Financial Analysis, Financial Analysis, Financial Analysis

Financial Analysis

Financial Analysis

=-FV ( Financial Analysis, Financial Analysis,0, Financial Analysis)

 

Financial Analysis, Financial Analysis, Financial Analysis

Financial Analysis

Financial Analysis

=-PV ( Financial Analysis, Financial Analysis,0, Financial Analysis)

Financial Analysis, Financial Analysis, Financial Analysis

Financial Analysis

Financial Analysis2)

=-PV ( Financial Analysis, Financial Analysis, Financial Analysis)

Financial Analysis, Financial Analysis, Financial Analysis

Financial Analysis

Financial Analysis2)

=-PMT ( Financial Analysis, Financial Analysis, Financial Analysis)

Financial Analysis, Financial Analysis, Financial Analysis

Financial Analysis

Financial Analysis2)

 

Financial Analysis1)

=-FV ( Financial Analysis, Financial Analysis, Financial Analysis)

 

 

 

=-FV ( Financial Analysis, Financial Analysis, Financial Analysis,0,1)

Financial Analysis, Financial Analysis, Financial Analysis

Financial Analysis

Financial Analysis2)

 

Financial Analysis1)

=-PMT ( Financial Analysis, Financial Analysis,0, Financial Analysis)

 

 

 

=-PMT ( Financial Analysis, Financial Analysis,0, Financial Analysis, 1)

Note:

  1. Annuity is computed for payment at the beginning of the year
  2. Annuity is computed for payment at the end of the year
  3. MS Excel automatically put negative value for loan. Thus to make it positive, we put negative in the beginning of the formula.

Financial Analysis Calculators

Below are the 12 financial calculators

No Given Find Calculator
1
k, n, P
F
2
k, n, F
P
3
k, n, A
P
4
k, n, P
A
5
k, n, A
F
6
k, n, F
A
7
k, P, F
n
8
k, A, F
n
9
k, A, P
n
10
n, P, F
k
11
n, A, F
k
12
n, A, P
k

 

<Previous | Next | Content >

 

 

This tutorial is copyrighted.

Preferable reference for this tutorial is

Teknomo, Kardi (2006) Tutorial on Feasibility Study. http://people.revoledu.com/kardi/tutorial/What-If-Analysis/index.html