CES Financial Functions & Modeling

Question 1

What does the PMT function in Excel calculate?

Accepted Answer

The periodic payment for a loan or annuity

Answer

PMT calculates the fixed periodic payment required to pay off a loan or annuity over a specified number of periods at a constant interest rate.

Question 2

Which Excel function calculates the Net Present Value of an investment?

Accepted Answer

NPV

Answer

The NPV function calculates the net present value of an investment based on a discount rate and a series of future cash flows.

Question 3

In the PMT function =PMT(rate, nper, pv), what does the argument 'nper' represent?

Accepted Answer

The total number of payment periods

Answer

'nper' stands for number of periods, representing the total number of payment periods in the loan or annuity.

Question 4

Which Excel function returns the Internal Rate of Return for a series of evenly spaced cash flows?

Accepted Answer

IRR

Answer

The IRR function returns the internal rate of return for a series of cash flows that occur at regular, equally spaced intervals.

Question 5

What does the FV function in Excel calculate?

Accepted Answer

The future value of an investment based on periodic payments

Answer

FV calculates the future value of an investment based on a constant interest rate, regular payments, and an optional initial principal amount.

CES - Certified Excel Specialists Practice Test