Table 1: F uture Value Interest F actor (F. V. IF.) ($1 at r% for n periods). F. V .. Table 3: Future Value of an Annuity Interest Factor (FVIFA) ($1 per period at r%. n \ r. 1%. 2%. 3%. 4%. 5%. 6%. 7%. 8%. 9%. 10%. 11%. 12%. 13%. 14%. 15%. 16%. 17%. 1. This tutorial demonstrates how to create the PVIF, FVIF, PVIFA, and FVIFA tables using Excel. I use conditional formatting, custom number formatting, data.
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Are you a student? Did you know that Amazon is offering 6 months of Amazon Prime – free two-day shipping, free movies, and other benefits – to students? Click here to learn more. Virtually every finance textbook has, at the back, a series of tables that contain multipliers fcifa can be used to easily calculate present or future values without the need for a financial calculator. In recent years these tables have slowly given way to financial calculators, but they are still widely used by some professors and on some professional exams.
This tutorial will demonstrate how to create these tables using Excel. The tables created here are much better than the textbook tables because they overcome a couple of limitations:. As noted, these tables provide a great deal of flexibility. This flexibility is achieved using standard Excel features such as time value of money functionstwo-input data tables, data validation, and conditional formatting. Time value of money tables are very easy to use because they provide a “factor” that is multiplied by a present tvifa, future value, or annuity payment to find the answer.
So, armed with the appropriate table and a way to multiply any calculator or even with pencil and paper you too can easily solve time value of money problems. In this case, the table provides a factor that is multiplied by a future value of a lump sum cash flow in order to obtain its present value. How much do you need to deposit today in order to achieve your goal?
The PVIF is 0. But what happens if the interest rate is 3. Then you have to interpolate because 3. The average is 0. Not too bad, but the tables that we create here can easily have the exact interest rate that you need.
Time Value of Money Tables in Excel |
The key to creating the tables is to understand that they are all based upon the basic time fbifa of money formulas. Substituting 1 for FV, 3 for N, and 0. That is the same as the PVIF that we originally pulled from the table.
Tabl we are building these tables with Excel, we can use its built-in functions PV in this case instead of the mathematical formula. Rather than creating a large table with the PV function repeated over and over again, we will use Excel’s two-input data table feature.
This allows us to enter a formula once, and then it will automatically populate the table based on values in the left column and top row of fvira table. This feature is typically used for sensitivity analysis. For example, we might want to see how the present value changes when both the interest rate and number of periods changes.
The snippet below shows the formulas that are in the PVIF table from above:. Note that the PV function is only used in the upper-left corner of the table. The rest of the table is filled in automatically when we use the Data Table command.
It works by substituting the a value from the top row and left column into the cells specified F1 and F2. Excel does this repeatedly to fill in the table. Table recalculation can be slow for large tables or complicated formulas, so one of Excel’s calculation options is to Automatic Except for Data Tables.
We don’t need to use that setting here, but you should be aware that it exists. Our PVIF table will serve as a template for each of the other three tables. Once we get this working properly, we can simply copy the worksheet and then change the formula that drives the table.
Before creating the data table, I should explain the data in E1: This is the area specifically, F1 and F2 where Excel will substitute the values from the top row and left column to get the numbers to paste into the table. You can try it yourself: Notice that the value in A10 has changed to 0. That is the same value that we used for the PVIF in the original example problem above. So, essentially what happens in the data table is that Excel will plug numbers into F1 and F2 and then recalculate the formula in A The results will be placed into an array at the intersection of the appropriate row and column.
The Table function will display that array in our table area B To create the data table we need to select A You will now see the following dialog box:. This is where you tell Excel that cell F1 is where to plug in the numbers from the top row of the table the interest rates and that F2 is where to plug in the numbers from the left column the period numbers. Please note that the actual numbers in F1 and F2 do not matter at all because Excel is going to replace them to create the table.
Again, this is a two-input data table. You can also create a one-input data table by specifying only the row or column input cell, but that wouldn’t suit the purpose here. Your worksheet should now look like the one below, except for the shading in row At this point the PVIF table is fully functional. If you change the value in B1, for example, then the interest rates in the table will change, and the interest factors will be recalculated as well.
However, we need to clean this up a bit to make it more functional. Formatting isn’t just for making your spreadsheet pretty. It can also add to the functionality. In this section we will see how to apply several different kinds of formatting and data validation rules to make the TVM tables more flexible and functional. Let’s take care of a couple of simple items first. We don’t need to see the contents of E1: F2, so we can hide those cells by setting the font color to white.
Also, we don’t need to see the number in A In fact, it just confuses things. So, we will apply a custom format to display the text “Period” instead of the result of the formula. Note that this does not change the formula or the result, only what appears in the cell. To set the custom number format, select A10 and then right click and choose Format Cells. Go to the Number tab and choose the Custom category.
In the Type edit box, enter “Period” include the quotation marks. This tells Excel to display the word “Period” regardless of the result of the formula. Click the OK button to apply the custom number format. Note that if you look at the formula bar you will see that the formula is still there.
Only the formatting of the result has been changed. Let’s set one more custom number format, this time in A We want the period numbers to have two decimal places and to be roughly centered in column A. The format mask to do that is 0. Note that the underscores add spaces to the number format, and that the right paren at the end is required.
Conditional formatting changes the look of a cell or range when certain conditions are met.
To set up the rules, select a cell or range and then click the Conditional Formatting button on the Home tab of the ribbon. Choose New Rule from the menu. We want to create rules that are based on formulas, so choose the last item in the Rule Type list Use a formula to determine which cells to format.
This leads to the following dialog box:. You can see how the rules are created.
They must be formulas that will evaluate to either True or False. Exit tzble the dialog box so that we can start creating new rules. The first rule will create the shading and borders for the top row of our table.
AE10 and then call up the dialog box above. We only want to apply the format to the cells if they are in the “visible” part of the table that is, the column is within the range fvia by the number of columns gvifa B6. So, the rule will be:. We need to add 1 to the number of columns because we are including column A, which is not a part of the 30 columns fcifa. Apply a format by clicking the Format button and apply some borders, background shading, and a bold font.
Click OK to apply the formatting rule. To test it, change B6 to, say, 10 and make sure that only A K10 have this format. If you change B6 to 15, then A P10 should have the format. For the second rule we want to apply a border to the right edge of column A, but only those rows that are supposed to be visible in the table.
A70 and then create this formatting rule:. This rule checks to see that it is in tqble A and that the row number is in the visible range. Apply a format with a border on the right edge only, and set the font to bold. The third rule will hide everything outside of the visible part of the table as defined by tahle values in B5: Select the entire table A