**Financial functions** calculate financial information, such as net present value and payments. For example, you can calculate the monthly payments required to buy a car at a certain loan rate using the PMT function.

**FV**

The future value (FV) of an initial investment, based on a constant interest rate and payment amount for the number of periods in months.

**NPV**

The net present value (NPV) of a series of unequal payments made at regular intervals, assuming a fixed interest rate per interval.

**PMT**

The payment (PMT) required by the term, interest rate, and principal.

**PV**

The present value (PV) of a series of equal payments made at regular intervals, assuming a fixed interest rate per interval.

To illustrate Excel’s most popular financial functions, we consider a loan with monthly payments, an annual interest rate of 6%, a 20-year duration, a present value of $150,000 (amount borrowed) and a future value of 0 (that’s what you hope to achieve when you pay off a loan).

We make monthly payments, so we use 6%/12 = 0.5% for Rate and 20*12 = 240 for Nper (total number of periods). If we make annual payments on the same loan, we use 6% for Rate and 20 for Nper.

**PMT**

Select cell A2 and insert the PMT function.

Note: the last two arguments are optional. For loans, Fv can be omitted (the future value of a loan equals 0, however, it’s included here for clarification). If Type is omitted, it is assumed that payments are due at the end of the period.

Result. The monthly payment equals $1,074.65.

Tip: when working with financial functions in Excel, always ask yourself the question, am I making a payment (negative) or am I receiving money (positive)? We pay off a loan of $150,000 (positive, we received that amount) and we make monthly payments of $1,074.65 (negative, we pay). Visit our page about the PMT function for many more examples.

**RATE**

If Rate is the only unknown variable, we can use the RATE function to calculate the interest rate.

**NPER**

Or the NPER function. If we make monthly payments of $1,074.65 on a 20-year loan, with an annual interest rate of 6%, it takes 240 months to pay off this loan.

We already knew this, but we can change the monthly payment now to see how this affects the total number of periods.

Conclusion: if we make monthly payments of $2,074.65, it takes less than 90 months to pay off this loan.

**PV**

Or the PV (Present Value) function. If we make monthly payments of $1,074.65 on a 20-year loan, with an annual interest rate of 6%, how much can we borrow? You already know the answer.

**FV**

And we finish this chapter with the FV (Future Value) function. If we make monthly payments of $1,074.65 on a 20-year loan, with an annual interest rate of 6%, do we pay off this loan? Yes.

But, if we make monthly payments of only $1,000.00, we still have debt after 20 years.

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