Hi kudanil,

The basic formulae underlying Excel's financial functions a

To solve for the future value, the formula is:
fv=-if(rate=0,pmt*nper+pv,(pv*((1+rate)^nper)+pmt*(1+r ate*type)*((1+rate)^nper
-1)/rate))

To solve for the present value, the formula is:
pv=-if(rate=0,pmt*nper+fv,(fv+pmt*(1+rate*type)*((1+ra te)^nper-1)/rate)/((1+ra
te)^nper))

To solve for the payment value, the formula is:
pmt=-if(rate=0,(pv+fv)/nper,(pv*((1+rate)^nper)+fv)/((1+rate*type)*((1+rate)^n
per-1)/rate))

To solve for the number of periods, the formula is:
nper=-if(rate=0,(pv+fv)/pmt,(log(1+(pv+pmt*type)/pmt*rate)-log(1+(fv+pmt*type)
/pmt*rate))/log(1+rate))

To solve for the interest rate, the formula is:
rate=(fv/pv)^(1/nper)-1
if pmt is 0. Otherwise, you can only solve for the interest rate through
iteration (eg using one of the above formulae).

The fv, pv, pmt, nper and rate variables are explained in Excel's Help on PV.

Functions like ipmt are variations on the above, as also described in Excel's
Help file.

Cheers

--
macropod
[MVP - Microsoft Word]


"Kudanil" wrote in message
...
| I need to explain to my student how is PMT and IPMT work. Does anyone can
| explain what is the equation behind those formulas?
|
| Regards
|
| kudanil.