Financial Functions perform common financial calculations, such as calculating the future value of an annuity at a given interest rate, straight-line depreciation, double-declining depreciation, or the payment term for a given investment. The financial functions in Objective Grid cover annuities, cash flows, assets. bonds, and Treasury Bills.
Financial functions are most useful for solving cash flow calculations where you know all but one variable. For example, if you know the present value of an investment, interest rate, and periodic payment, you can use the @FV function to calculate the future value of the investment. If you know the future value and other variables, but need to know the present value, you can use the @PV function.
Many financial functions require specifying a Day Count Basis. A Day Count Basis indicates the way in which the days in a month and the days in a year are to be counted. Most of the financial functions in securities involve 4 different Day Count Basis: 30/360, actual/actual, actual/360 and actual/365. 30/360 Day Count Basis assumes 30-day months and 360-day years (12 months x 30 days). Objective Grid also follows the ``End-of-Month"" rule which assumes that a security pays interest on the last day of the month and will always make its interest on the last day of the month. Special rules are followed when calculating the days between two dates on 30/360 Day Count Basis.
Example
For example, let StarDt_ate = D1/M1/Y1, End_Date = D2/M2/Y2.
1. If D1=31, Objective Grid uses 30 for D1.
2. If D2=31, Objective Grid uses 31, unless D1=30 or D1=31. In this case, Objective Grid uses 30.
3. If D1 is the last day of February (D1=28 or 29 in a leap year), Objective Grid uses 30 for D1.
4. If D2 is the last day of February (D2=28 or 29 in a leap year) and D1 is also the last day of
February, Objective Grid uses 30 for D2.
The special arguments used by Objective Grid financial functions are defined in Table TODO:
Financial functions use the arguments defined in Table:
ü interest rate
The
interest rate to be used in the calculations. The rate may be specified as
annual, monthly or quarterly, but it must agree with the increment you use for
periods. By default the interest rate is an annual rate.
ü present value
The
present value of an investment, representing the amount already received from or
committed to an investment.
ü Period
The number of
periods over which the loan, investment or depreciation is to be calculated. The
periods may be defined in months, quarters or years, but must agree with the
increment used to define interest rate.
ü future value
The future
value of an investment, given a certain present value, interest rate, and number
of periods.
ü Cost
The original cost
of a depreciable capital asset.
ü salvage value
The
remaining value of a capital asset after the depreciation period has
expired.
ü allowable life
The
allowable life of a depreciable item.
ü Yield
The interest rate
that will make the present value of the expected future cash flows equal to the
price of the financial instrument.
ü Price
The present value
of the expected future cash flows where the discount rate is equal to the yield
of the financial instrument.
ü coupon rate
The annual
coupon rate of a security.
ü Frequency
The number of
coupon payments in a year.
ü Basis
The day count
basis to be used in calculation. Functions related fixed income securities
usually require special dates as arguments: issue date, settlement date, first
coupon date, last coupon date, maturity date of a security. When specified, the
following constraints should be followed:
issue settlement maturity
issue first coupon maturity
issue last coupon maturity