Looking for an excel formula that will apply compound interest and will allow me to add a continuous contribution for "x" amount of years.
i.e. $10,000 contribution at 10% yearly interest every year. I contribute $10,000 every year for the next 35 years. What will the account value be?
I believe the FV() formula would be what you're looking for.
=FV(10%,35,-10000)
Keep in mind, there are variations to this formula.
10% assumes you only make one payment a year. If you pay 12 times a year, use 10%/12.
35 is the total number of years. This doesn't change even if you change the above.
-10000 is your 10k / year payment
Here's where it can get interesting. Here are some optional arguments for you:
Pv: Present Value. (Use if you are starting the account with > $0 in it)
Type: If the "payment period" is up front of the period, then place a 1 here, otherwise omit it)
Here's an example for $10,000 a year in monthly payments (12/year), using 1 because the payments are at the start of the month(period), not the end.
=FV(10%/12,35,-10000,,1)
Related
A business works on a subscription model basis with a expected churn rate (Cancellations) each month during year 1 at 5% & during the following year a churn rate of 2.5% due to the fact these are now established customers (long term).
A new feature or service is launched with a expect increase of subscriptions each month. I need to calculate how many subscriptions would that be in N years based on a 5% churn rate for the first 12 month & a 2.5% churn rate during year 2.
Below is currently how were are calculating this in excel however this is really in inelegant solution when trying to calculate this for say 5 - 10 year impacts.
https://i.stack.imgur.com/yF5Rx.png
Are there any accounting formulas or something mathamitcally I can produce to calculate this in a single cell? Given I would need to set the given churn rates for each year & length of time.
For ease lets say 95% of the time I would be working on a 3 year model of subscriptions & each year will need its own churn rate.
I thought perhaps something with exp & halving the value might work but have not found anything yet.
Here's one way to build the model. I'll make reference to this image:
First we set up the churn model.
Row 1: Since Churn Rates depend on subscription age, Row 1 has the subscription age (in months). This is for reference only and is not used in the calculations.
Row 2: Churn Rates.
Row 3: Since Churn Rates always enter the calculation as (1-ChurnRate), call that term (Single-month) Retention Rate. As an example, in B3 the formula is =1-B2.
Row 4: Since the effects of churn are cumulative over multiple months, we define another term Multi-month Retention Rate (abbreviated MMRR). In the first month this is set to 1; in subsequent months this is the product of previous single-month retention rates. So in C4 the formula is =B4*B3; in C5, =C4*C3, etc.
Row 5: The model as described in the Question indicated a fixed rate of new subscriptions = 100/month. When the subscription rate is fixed, it is convenient to sum up the MMRRs. So in B5 we have =B4; in C5, =B5+C4; in D5, C5+D4; etc.
At this point we're essentially done. If you multiply the values in Row 5 by any fixed rate of new subscriptions (e.g. 100/month in the original Question) we get the number of subscribers in that month. But what if you want to model where the number of new subscriptions varies month to month? Here's how ...
The basic idea is to multiply the monthly subscription rate by its age-appropriate MMRR. Note that Row 8 has varying numbers of new subscriptions (100, 110, 97) in the first 3 months. To get the total subscriptions in Mar-19 for example, we need to
multiply the 100 (Jan-19) subscriptions (that have a 2 month age) by the MMRR for a 2-month old subscription (0.9025),
multiply the 110 (Feb-19) subscriptions (that have a 1 month age) by the MMRR for a 1-month old subscription (0.95),
multiply the 97 (Mar-19) subscriptions (that have a 0 month age) by the MMRR for a 0-month old subscription (1), and
add those three products together.
This could be calculated on the worksheet by entering in D9 the formula =B8*D4+C8*C4+D8*B4. This type of calculation (sum up the pair-wise products of two arrays) is often done with Excel's SUMPRODUCT function. Here we need to take one of the arrays in reverse order, which is not directly supported by Excel. You could enter new subscriptions in reverse order, but that's an ugly kludge. Fortunately, it is do-able with a combination of the OFFSET(), COLUMN() and N() worksheet functions (see here for details). The required formula for B9 is
=SUMPRODUCT($B4:B4,N(OFFSET(B8,0,-(COLUMN($B8:B8)-COLUMN($B8)),1,1)))
This can then be copy/pasted into the rest of row 9.
This model approach is pretty flexible: the churn rates (row 2) and subscription rates (row 8) can both be varied month to month; the total number of retained monthly subscriptions is calculated automatically.
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 would like to use Excel to find future value daily and also add extra deposit every 30 days.
for example. my money started from $100 with 7% annual interest, and if the number of days to grow is 65 days. For every 30days I would add 100 to the money.
There is a website (Link is here) that does exactly what I am looking for but I would like to do the calculation. please advice.
Use:
=ROUNDUP(SUM(IF(MOD(ROW($A$1:INDEX($A:$A,H5)),30)=0,H3,0)*(1+H4/365)^(($H$5+1)-ROW($A$1:INDEX($A:$A,H5))),$H$2*(1+$H$4/365)^(H5+1)),2)
This is an array formula and requires the use of Ctrl-Shift-Enter when exiting edit mode instead of the usual Enter.
But this only calculates daily based on a 365 day year and 30 day month cycle.
I am trying to create a formula that offsets an "up-sell" amount 12 periods (columns) in the future.
For background: Each of our customers provides monthly recurring revenue (like a subscription. At the beginning of the model (1/1/18), I have a random number generator from 1-20 that calculates the period in which the customer could be up-sold.
As you can see in the photo and the formula that the IF statement looks at the random upsell period and adds in the additional revenue ($100) into that period and periods after that.
I am trying to create the formula so that once the if statement is satisfied (the random period >= the period that the cell is in) it adds the revenue 12 periods later, not in that period itself.
For example, Customer ABC's random upsell period is 3, instead of adding that revenue in period 3, I want it to add it in period 15 (12 periods later).
The formula that is currently being used is: =IF($B8>E$5,$C8,$C8+$D$3)
Please see attached image for reference, thank you]1
Not sure if that's what you are looking for and only works if your periods increments in 1 even after 12++ (13,14,15...).
Sorry you'll have to redefine the references but that gives you an idea:
In C5 : IF(C$4>12,IF(OFFSET(C4,0,-12)>=$A5,$C$2+$B5,$B5),$B5)
I'm looking to compute and show individual row totals and a Grand Total. I just need the formulae to put in the boxes so the calculation is automatic but the problem is the calculations are a little complicated...
I'm using data validation to select the day type. This is what I think I need:
Assign a price to the day type (either Standard day = £23 or Extended day = £26).
Apply a volume discount where appropriate. If Jack is attending all week (5 days) and the day type is the same for all (all Standard or all Extended), the total cost is £100 (or £120)
Else the total number of days needs to be added up for Jack. (Number of days for each ‘day type’) and priced up.
For his siblings after the first, as above but apply an additional discount of 15%.
The grand total then needs to show at the bottom.
Well, it is not the best of data layouts but this may serve, in L6 and copied down to L13:
=IF(OR(A6="Brother",A6="Sister"),0.85* IF(COUNTIF(B6:F6,"Standard day")=5,100,IF(COUNTIF(B6:F6,"Extended day")=5,120,COUNTIF(B6:F6,"Standard day")*23+COUNTIF(B6:F6,"Extended day")*26)), IF(COUNTIF(B6:F6,"Standard day")=5,100,IF(COUNTIF(B6:F6,"Extended day")=5,120,COUNTIF(B6:F6,"Standard day")*23+COUNTIF(B6:F6,"Extended day")*26)))
and =SUM(L1:L16) in D16.
It would be better practice not to hard code the daily rates/discount, but extracting these from C1:D2 would have increased the length of the formula further.
Note also the result is not £429.95 (you may have changed your example after doing your calculations).