Evaluating the Financial Impact of Loans and Investments

This is a paper that is focusing on Evaluating the Financial Impact of Loans and Investments. The paper also illustrates the chapters to focus in while writing the assignment sections.

Evaluating the Financial Impact of Loans and Investments

This week we will see:
Chapter 6 “Evaluating the Financial Impact of Loans and Investments”

Level 1 explores some fundamental financial calculations to evaluate different financing options

Level 2 & 3, these basic concepts are expanded upon to develop a cash flow analysis and an amortization table, which is a schedule for paying off a loan.
You also will learn about Excel tools for calculating depreciation, a technique used to allocate the costs of an asset over its useful life.

Chapter # 6 – Level 1: Objectives (Pages 360 – 377)
Firstly, understand how simple interest and compound interest are calculated (page 360)
Secondly, determine the value of a loan payment (PMT Function) (page 363)
Thirdly, analyze positive and negative cash flows (pages 365)
Fourthly, determine the future value and the present value of a financial transaction (Using the RATE, NPER, PV, and FV Functions (pages 368)
Lastly, determine the interest rate and the number of periods of a financial transaction (page 372)

Evaluating the Financial Impact of Loans and Investments

We will cover Levels 1, 2, and 3.

Chapter # 6 – Level 1: Objectives (Pages 360 – 377)
Firstly, understand how simple interest and compound interest are calculated (page 360)
Secondly, determine the value of a loan payment (PMT Function) (page 363)
Thirdly, analyze positive and negative cash flows (pages 365)
Fourthly, determine the future value and the present value of a financial transaction (Using the RATE, NPER, PV, and FV Functions (pages 368)
Lastly, determine the interest rate and the number of periods of a financial transaction (page 372)

Chapter # 6 – Level 2: Objectives (Pages 379 – 399)
Set up an amortization table to evaluate a loan
Create a sequence of numbers automatically
Calculate principal and interest payments
Calculate cumulative principal and interest payments
Set up named ranges for a list
Calculate depreciation and taxes

Chapter # 6 – Level 3: Objectives (Pages 401 – 415)
Set up a worksheet to analyze profitability
Calculate the net present value
Calculate the internal rate of return
Also, calculate the return on investment