EFFECT function

Returns the effective annual interest rate, given the nominal annual interest rate and the number of compounding
periods per year.

Syntax

EFFECT(nominal_rate, npery)

The EFFECT function syntax has the following arguments:

Nominal_rate Required. The nominal interest rate.

Npery Required. The number of compounding periods per year.

Remarks

Npery is truncated to an integer.

If either argument is nonnumeric, EFFECT returns the #VALUE! error value.

If nominal_rate ≤ 0 or if npery < 1, EFFECT returns the #NUM! error value.

EFFECT is calculated as follows:

EFFECT (nominal_rate,npery) is related to NOMINAL(effect_rate,npery) through

Example

Data Description

0.0525 Nominal interest rate

4 Number of compounding periods per year

Formula Description Result

=EFFECT(A2,A3) Effective interest rate with the terms above 0.0535427

FV function
FV, one of the financial functions, calculates the future value of an investment based on a constant interest rate. You can
use FV with either periodic, constant payments, or a single lump sum payment.

Syntax

FV(rate,nper,pmt,[pv],[type])

For a more complete description of the arguments in FV and for more information on annuity functions, see PV.

The FV function syntax has the following arguments:

Nper Required. The total number of payment periods in an annuity.

Pmt Required. The payment made each period; it cannot change over the life of the annuity. Typically, pmt contains
principal and interest but no other fees or taxes. If pmt is omitted, you must include the pv argument.

Example

Data Description

0.12 Annual interest rate

12 Number of payments

-1000 Amount of the payment

Formula Description Result

=FV(A2/12, A3, A4) Future value of an investment using the $12,682.50

ACCRINTM function
Returns the accrued interest for a security that pays interest at maturity.

Syntax

ACCRINTM(issue, settlement, rate, par, [basis])

IMPORTANT: Dates should be entered by using the DATE function, or as results of other formulas or functions. For
example, use DATE(2008,5,23) for the 23rd day of May, 2008. Problems can occur if dates are entered as text.

The ACCRINTM function syntax has the following arguments:

Issue Required. The security's issue date.

Settlement Required. The security's maturity date.

Rate Required. The security's annual coupon rate.

Par Required. The security's par value. If you omit par, ACCRINTM uses $1,000.

Basis Optional. The type of day count basis to use.

Basis Day count basis

0 or omitted US (NASD) 30/360

1 Actual/actual

2 Actual/360
Basis Day count basis

3 Actual/365

4 European 30/360

Remarks

Microsoft Excel stores dates as sequential serial numbers so they can be used in calculations. By default, January 1, 1900
is serial number 1, and January 1, 2008 is serial number 39448 because it is 39,448 days after January 1, 1900.

Issue, settlement, and basis are truncated to integers.

If issue or settlement is not a valid date, ACCRINTM returns the #VALUE! error value.

If rate ≤ 0 or if par ≤ 0, ACCRINTM returns the #NUM! error value.

If basis < 0 or if basis > 4, ACCRINTM returns the #NUM! error value.

If issue ≥ settlement, ACCRINTM returns the #NUM! error value.

ACCRINTM is calculated as follows:

ACCRINTM = par x rate x A/D

where:

A = Number of accrued days counted according to a monthly basis. For interest at maturity items, the number of days
from the issue date to the maturity date is used.

D = Annual Year Basis.

Example

Data Description

39539 Issue date

39614 Maturity date

0.1 Percent coupon

1000 Par value

3 Actual/365 basis (see above)

Formula Description Result

=ACCRINTM(A2,A3,A4,A5,A6) The accrued interest for the terms above. 20.54794521

Syntax

XIRR(values, dates, [guess])

The XIRR function syntax has the following arguments:

Values Required. A series of cash flows that corresponds to a schedule of payments in dates. The first payment is
optional and corresponds to a cost or payment that occurs at the beginning of the investment. If the first value is a cost
or payment, it must be a negative value. All succeeding payments are discounted based on a 365-day year. The series of
values must contain at least one positive and one negative value.

Dates Required. A schedule of payment dates that corresponds to the cash flow payments. Dates may occur in any
order. Dates should be entered by using the DATE function, or as results of other formulas or functions. For example,
use DATE(2008,5,23) for the 23rd day of May, 2008. Problems can occur if dates are entered as text. .

Guess Optional. A number that you guess is close to the result of XIRR.

Remarks

Microsoft Excel stores dates as sequential serial numbers so they can be used in calculations. By default, January 1, 1900
is serial number 1, and January 1, 2008 is serial number 39448 because it is 39,448 days after January 1, 1900.

Numbers in dates are truncated to integers.

XIRR expects at least one positive cash flow and one negative cash flow; otherwise, XIRR returns the #NUM! error value.

If any number in dates is not a valid date, XIRR returns the #VALUE! error value.

If any number in dates precedes the starting date, XIRR returns the #NUM! error value.

If values and dates contain a different number of values, XIRR returns the #NUM! error value.

In most cases you do not need to provide guess for the XIRR calculation. If omitted, guess is assumed to be 0.1 (10
percent).

XIRR is closely related to XNPV, the net present value function. The rate of return calculated by XIRR is the interest rate
corresponding to XNPV = 0.

Excel uses an iterative technique for calculating XIRR. Using a changing rate (starting with guess), XIRR cycles through the
calculation until the result is accurate within 0.000001 percent. If XIRR can't find a result that works after 100 tries, the
#NUM! error value is returned. The rate is changed until:

where:

di = the ith, or last, payment date.

d1 = the 0th payment date.

Pi = the ith, or last, payment.

Data

Values Dates

-10,000 1-Jan-08

2,750 1-Mar-08

4,250 30-Oct-08

3,250 15-Feb-09

2,750 1-Apr-09

Formula Description (Result) Result

=XIRR(A3:A7, B3:B7, 0.1) The internal rate of return (0.373362535 or 37.34%) 37.34%