Excel Function Rate Brad Ryan, November 19, 2024 The core of financial modeling often involves calculating interest rates within spreadsheets. The `RATE` feature in Excel is a vital tool for determining the interest rate per period of an investment or loan. For example, if you know the present value, payment, and number of periods for a loan, this…
Breakeven Inflation Rate Brad Ryan, November 17, 2024 The market’s expectation of future inflation, often called the breakeven inflation rate, can be derived from the difference between nominal Treasury yields and the real yield of Treasury Inflation-Protected Securities (TIPS) of the same maturity. For example, if a 10-year Treasury note yields 4%, and a 10-year TIPS yields 1.5%,…
What Is Effective Rate Brad Ryan, October 16, 2024 The effective rate is the actual rate of return on an investment or loan once the effects of compounding interest are taken into account. For instance, a nominal annual interest rate quoted may not reflect the true cost if interest is compounded more frequently than annually. This represents the actual…
Formula Sustainable Growth Rate Brad Ryan, September 15, 2024 The formula sustainable growth rate is a crucial financial metric. This calculation determines the maximum rate at which a company can expand without needing to raise external equity, while maintaining a constant debt-to-equity ratio. It serves as a benchmark for evaluating a firm’s capacity for self-funded expansion, leveraging retained earnings….
Internal Rate Return Brad Ryan, August 22, 2024 The internal rate of return (IRR) is a pivotal metric in financial analysis, representing the discount rate at which the net present value (NPV) of all cash flows from a project or investment equals zero. For instance, if an investment promises a series of future returns, this rate indicates the…
Excel Calculate Growth Rate Brad Ryan, August 22, 2024 Understanding how to excel calculate growth rate is crucial for financial analysis, business forecasting, and tracking performance trends. Using spreadsheet software like Microsoft Excel, one can determine percentage change over a period, showcasing areas of success or decline. For example, sales figures from one year to the next can reveal…