MIS Excel Chapter 11

How would you construct the formula to calculate the payment for a loan, where rate is 6%, the loan amount is $2,000, and payments will be made monthly for six years?

=PMT(.06/12, 6*12, -2000) *remember monthly, multiply rate and periods

What function calculates the amount of interest paid over a specific number of periods?

CUMIPMT function

What do you call the method of depreciation that assumes the value of an asset depreciates more in the first year than in the second year?

Declining balance depreciation (DB)

What function can help businesses determine the future return on an investment?

FV function

Which function can be used to identify the interest portion for a mortgage payment?

IPMT function

Which function indicates the profitability of an investment and is commonly used in business when choosing between investments?

IRR function

What function would you use to find out how much money you would pay on a mortgage loan?

PMT function

Which function can be used to identify the principal portion for a mortgage payment?

PPMT function

Which function calculates what an investment would be worth in today's dollars?

PV function

What function calculates the interest rate per period for an investment or loan, given that you know the present value of the loan, payment amount, and number of payment periods?

RATE function

Which depreciation method assumes that the value of the asset loses are the same amount of value each year of its life?

Straight-line depreciation (SLN)

What is a(n) investment with recurring payments?

annuity

What is shown in an amortization table?

interest and principal payments, the remaining balance of the loan, payments over life of the loan

What can be found in a depreciation schedule records?

net book value

Which argument in the PMT function represents number of periods?

nper

What do you call the ratio of the amount of money gained or lost from an investment relative to the initial amount invested?

return on investment (ROI)

What do you call the value of an asset at the end of its useful life?

salvage value