pmt

Six Functions of a Dollar

Updated 5-19-08 (Note: this is $1 a year and yearly interest - if you are doing monthly interest - it is yearly/12)

A few people have written to inquire about the Six Functions of a Dollar.

The basic starting thought is what happens to one dollar under different scenarios.

This is set up at a 10 year period (I have in E2) at a certain interest rate - lets say 9% (which in excel would be best described as .09 - I have in E3).

	math	excel	answer
Future worth of $1	=(1+E3)^E2	=FV(E3,E2,0,-1)	2.37
Future worth of $1.00 per period	=(((1+E3)^E2)-1)/E3	=FV(E3,E2,-1,0)	15.19
Sinking fund factor	=E3/(((1+E3)^E2)-1)	= PMT(E3,E2,0,-1)	0.07
Present worth of $1	=(1/((1+E3)^E2))	=PV(E3,E2,0,-1)	0.42
Present worth of $1 per period	=(1-(1/(1+E3)^E2))/E3	=PV(E3,E2,-1,0)	6.42
Annunity worth $1. today	=E3/(1-(1/(1+E3)^E2))	=PMT(E3,E2,-1,0)	0.16

1. FUTURE WORTH OF $1. The amount to which one dollar will grow with compound interest over a given period of time at a given interest rate.
2. FUTURE WORTH OF $1.00 PER PERIOD. The amount to which one dollar per period will grow over a given number of periods at a given interest rate.
3. SINKING FUND FACTOR. Fund is for estimating a reserve needed at a
4. PRESENT WORTH OF $1.00. Present value of one dollar that is to be received at a future time at a given interest rate?
5. PRESENT WORTH OF $1.00 PER PERIOD. What is the present value of installments of one dollar for a given period of time at a given rate?
6. ANNUITY WORTH $1.00 TODAY. Repayment of principal and interest required to amortize a loan of one dollar at a given interest rate during a given period of time.

The completed document can be downloaded (virus free and macro free) by clicking here (18k)