K
Keith
Hello,
I must be missing something -- here’s the question.
If I use the Excel PMT(rate, number of periods, beginning balance, 0,0)
function, I can obtain the payments that would be made from an annuity, given
the three parameters shown with the function above. The last two values are
for “future value†which is set to zero, and “type†which can be a zero or 1,
but I set to zero.
Once I obtain the payment, I should be able to reverse the calculation and
obtain the original value by using the FV(rate, periods, payments, present
value, type) function.
The problem is that once I use the PMT function, the reverse isn’t giving me
the correct value. For example, the following items…
PMT settings
Rate = .04
Periods = 3
Beginning Balance = 10,000
Last two variables set to zero
Results (payment) = $3,603.49
FV settings
Rate = .04
Periods = 3
Payments = $3,603.49
Last two variables set to zero
Result (future value) = $11,248.64
What is the explanation of the difference between these two?
Why isn’t the result of the FV function $10,000 in this example?
Keith
I must be missing something -- here’s the question.
If I use the Excel PMT(rate, number of periods, beginning balance, 0,0)
function, I can obtain the payments that would be made from an annuity, given
the three parameters shown with the function above. The last two values are
for “future value†which is set to zero, and “type†which can be a zero or 1,
but I set to zero.
Once I obtain the payment, I should be able to reverse the calculation and
obtain the original value by using the FV(rate, periods, payments, present
value, type) function.
The problem is that once I use the PMT function, the reverse isn’t giving me
the correct value. For example, the following items…
PMT settings
Rate = .04
Periods = 3
Beginning Balance = 10,000
Last two variables set to zero
Results (payment) = $3,603.49
FV settings
Rate = .04
Periods = 3
Payments = $3,603.49
Last two variables set to zero
Result (future value) = $11,248.64
What is the explanation of the difference between these two?
Why isn’t the result of the FV function $10,000 in this example?
Keith