CES Financial Functions & Modeling 2

Question 1

How does the XNPV function differ from the standard NPV function?

Accepted Answer

XNPV handles cash flows that occur at irregular time intervals

Answer

XNPV allows cash flows to occur at irregular intervals by requiring specific dates for each cash flow, unlike NPV which assumes equally spaced periods.

Question 2

Which Excel function calculates straight-line depreciation of an asset for one period?

Accepted Answer

SLN

Answer

SLN calculates the straight-line depreciation of an asset for one period, spreading the cost evenly over the asset's useful life.

Question 3

What does the RATE function calculate in Excel?

Accepted Answer

The interest rate per period of an annuity

Answer

RATE calculates the interest rate per period of an annuity when given the number of periods, payment amount, and present value.

Question 4

Which Excel function calculates the Modified Internal Rate of Return?

Accepted Answer

MIRR

Answer

MIRR (Modified Internal Rate of Return) accounts for both the cost of investment and the interest rate earned on reinvested cash flows, correcting a key flaw in standard IRR.

Question 5

What is the purpose of the IPMT function in Excel?

Accepted Answer

Calculate the interest portion of a specific loan payment

Answer

IPMT returns the interest payment for a given period of a loan, allowing you to see exactly how much of each payment goes toward interest.

CES - Certified Excel Specialists Practice Test

CES - Certified Excel Specialists Practice Test

CES Financial Functions & Modeling 2