I am currently trying to create an retirement withdrawal calculator in Microsoft Excel. Does anyone know a general formula that I can use to calculate my monthly withdrawal?
The following variables are given:
Amount saved at the beginning of retirement: y
Years of withdrawal: d
Rate of return: i
Frequency of withdrawals: monthly
After x years the initial amount should be used up.
For example:
Amount saved at the beginning of retirement: 100,000$
Years of withdrawal: 20 years
Rate of return: 5% per year
Frequency of withdrawals: monthly
After 20 years the initial amount should be used up.
I would like to calculate how much money I can withdraw per month. Does anyone know a formula behind the common calculators found on the Internet?
Thanks in advance.
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I am able to use the PMT function in Excel for periods of 12, 24 and 36 months. But I am falling short of understanding how to use the function for 6 months periods.
Let's suppose I have a debt of 10 000$ and the annual interest from the bank is 10%.
If I pay monthly and I want to pay within the first year, I will do the following formula :
=PMT(10%/12;12;10000)
But what if I need to pay in 6 months?
At first I thought of doing
=PMT(10%/6;6;10000)
But this gives me more interest than paying over a year!
I searched various websites without luck.
My last resort was the official Excel website : they actually have an example of a payment over 10 months. Following their code, I would write :
=NPM(10%/12;6;10000)
The result is smaller than 12 months' interest (yay!), but why!?
Why do we calculate the interest over 12 months, and not 6? I can't seem to understand that part.
The issue is that you're adjusting an interest rate which is independent of the time you pay it off in. Technically PMT takes an interest rate equal to the period of time you are considering.
So if you're talking about paying over 6 months with an annual interest rate the correct formula is:
=PMT(10%/12;6;10000)
10%/12 is the 10% annual interest converted to a monthly period. 6 is the number of months, and 10000 is the value of the loan. 10%/6 is actually a bi-monthly interest rate.
Technically if you're compounding annually and pay off $10,000 in 5 years, at 10% p.a. the formula would be:
=PMT(10%;5;10000)
I am trying to create a mortgage calculator that forecasts the number of months it will take to pay off the loan.
I have successfully done this for a basic calculation where the monthly payment doesn't change but what I need is a calculation that works for payments increasing over 5 years.
I have uploaded my spreadsheet to Dropbox at the following link as it might be easier to understand if you can see what I am doing:
Example spreadsheet
The value in V6 is the one that I want to display the months it will take to pay off the loan.
I use the basic loan details in cells G5,G6 and G7 and the monthly repayment in V5.
I then need to run this calculation to determine the monthly payment for year one (B12):
$G$8+(($B$16*52/12)*$B$12)+$G$9
This gives me the actual monthly payment. I then need to repeat these steps for years 2,3,4 and 5 in cells D12, F12, H12 and J12. So for example year five I would use the following formula:
$G$8+(($J$16*52/12)*$J$12)+$G$9
The formula I am using to actually get the monthly payments forecast is:
=ROUNDUP(NPER(G6/12,V5,-G5),0)
Now I understand that to calculate a basic loan works but I need the repayments to increase year on year and for the total months for the repayment to reflect this.
Please can someone suggest a way around this problem or point me in the right direction?
This does exactly what I need and provides a detailed answer with a template:
Experts Exchange example with explanation
To provide a valid input to the NPV and IRR functions, I'm trying to create a range of values of annual even returns for a given number of years. Although question is also valid for any similar excel function, my specific case is related with NPV and IRR.
My initial investment is 25000$ and I get 5000$ from that investment annually for 10 years. Interest rate is 10% for NPV and IRR.
Instead of providing these values like BEFORE I'm looking for a way similar to AFTER, if possible without any macros, only by using a few functions?
Your first formula is actually discounting a 25000 investment made in 1 years time, then receiving cashflow of $5000 a year from the end of year 2, year 3 .... year 11
You wanted
=NPV(C1,C5:C14)-C4
=5777.84
which as an annuity can be calculated directly with
=-PV(10%,10,5000)-25000
=5777.84
On your second formula
=RATE(10,5000,-25000)
=15.1%
I wanted to make a sentence in Excel that would read "You will be free of debt in X years and X months, at $X per month." and stick it at the bottom of my budget so as to motivate myself. I used the values for:Total Debts (B27), and Amount Paid per Month (C23). Using only those reference values, and without using hidden cells, I put together the following:
="You will be free of debt in "&IF(ROUND(SUM(B27/C23),0)<12, 0, ROUND(SUM(B27/C23)/12,0))&" years and "&(IF(IF(MOD(ROUND(SUM(B27/C23),0),12)=0,0,(SUM(ROUND(SUM(B27/C23),0),-(12*ROUND(SUM(ROUND(SUM(B27/C23),0)/12),0)))))>0,IF(MOD(ROUND(SUM(B27/C23),0),12)=0,0,(SUM(ROUND(SUM(B27/C23),0),-(12*ROUND(SUM(ROUND(SUM(B27/C23),0)/12),0))))),(SUM(IF(MOD(ROUND(SUM(B27/C23),0),12)=0,0,(SUM(ROUND(SUM(B27/C23),0),-(12*ROUND(SUM(ROUND(SUM(B27/C23),0)/12),0)))))+12))))&" months at "&DOLLAR(C23)&" per month."
It works, but it isn't pretty, and I want it to be prettier. Are there any functions that I could be using that I don't know about, or is this as pretty as it gets without using hidden cells?
If A1 = total debt and A2 = monthly payments then...
Years remaining = FLOOR(A1/(A2*12),1)
and ...
Months remaining = CEILING((A1-A2*12*(FLOOR(A1/(A2*12),1)))/A2,1)
In your sheet this should work...
="You will be free of debt in "&FLOOR(B27/(C23*12),1)&" years and "&CEILING((B27-C23*12*(FLOOR(B27/(C23*12),1)))/C23,1)&" months, at $"&C23&" per month."
I'm trying to figure out what rate of return I would need on an investment in order to compare to paying down a mortgage.
I have calculated the change in the mortgage - I know how much money I'd save by the end of the loan term and how much money I'd need to put in. I'm trying to compare that to an equivalent investment - treat any lump sum payment as the principal of an investment, treat any monthly overpayment as a monthly contribution to an investment, plug in the final value, and solve for the effective rate of return.
I've looked at the RATE and the IRR commands. IRR seems close to what I want, but it wants a series of values for the input flows, but I have it as a periodic regular investment.
For an example with numbers - if I pay an extra $100 a month on the mortgage for 120 months, I can save $10000 in total cost. What command can I use to calculate this in terms of an investment? If I invest $100 a month for ten years and end up with $10000, what was my annualized rate of return?
If I start with principal PV invested at rate R, I contribute monthly payment M for N months, and I end up with final value FV at the end of those N months, I'd like to solve for R given the other variables.
I know there's another factor regarding the mortgage interesting being tax deductible - I'll look at worrying about that after I figure this part out.
:)
Your monthly return is given by this RATE formula
number of periods = 120 (10*12)
contributions of $100 per period
future value of 10,0000
=RATE(10*12,-100,0,10000)
=-0.32% per month
Note as a check =RATE(10*12,-100,0,12000) = 0
which is equivalent to an annual rate of
=1-(1-0.32%)^12
=-3.73%