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An overview of various arithmetic and financial formulas used in finance, including excel functions for sum, descriptive statistics, and financial functions such as future value, present value, and payments. Students are introduced to the concept of arithmetic operators, brackets, and array formulas, as well as the use of functions like sum, average, min, max, median, mode, fv, pv, and pmt.
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MSc Finance, MSc International Banking & Finance, MSc Investment & Finance, MSc International Accounting & Finance
Simple Arithmetic = denotes an Excel formula Arithmetic operators: + - / * ^ Use brackets to avoid problems with precedence =SUM( range of cells ) can be used to add a number of values
Descriptive Statistics Mean =AVERAGE( range of cells ) Standard Deviation =STDEV( range of cells ) Minimum =MIN( range of cells ) Maximum =MAX( range of cells ) Median =MEDIAN( range of cells ) Mode =MODE( range of cells )
Downloading From LearnOnline
Financial Functions Future Value =FV() Present Value =PV() Payments =PMT() Net Present Value =NPV() (Covered in Unit 4, Capital Budgeting)
Future Value Given a constant interest rate r , what will a certain sum X be worth after n periods? FV=X(1+r) n e.g. Would you rather have £100 today or £ after ten years? FV=100*(1.06) 10 = £179. X=£ R=6% N=10 YEARS
Present Value Given a constant interest rate r , what is the current value of a certain sum X to be received after n periods? PV=X/(1+r) n e.g. What would you need to save at 5% compound interest to receive £1500 after five years? PV = 1500/(1.05) 5 = £1,175. X=£ R=5% N=5 YEARS
Present Value PV=X/(1+r) n i) Arithmetic formula ( use ^ for “power”) ii) PV Function (sign future value as negative - is this right?)
Payments =PMT() i) Arithmetic formula (not worth doing) ii) PMT Function (sign present value as negative - is this right?)
Next week Tuesday - Friday, Labs Finish working through Units 1 & 2, plus extra examples (on LearnOnline)