|Annuity Extended family|
|The standard annuity functions (PMT etc) extended to allow for industry methods of interest daycount and payment periodicity|
|Description: The standard annuity functions (PMT etc) extended to allow for industry methods of interest daycount and payment periodicity.|
|Introduction: This family of functions is for when you want to calculate annuities but are hampered by the fact the annuity in question does to adhere to the restrictive rules of standard annuity formulae ie:|
This seems inappropriate because the calculation is a generic one and the spreadsheet is merely calculating interest according to the actual number of days - it is not modelling anything particularly unique to your situation.
What these functions do is do a complete cashflow"s calculations internally, and in some cases use a highly efficient iterative technique to derive the answer.
The two "different" parameters to a normal annuity calculation are DayCount and ØPeriodsIntØ. These govern how and when interest is calculated, respectively.
Footnote: The idea for this family came from an investment bank that contacted us enquiring as to whether there was a way to adapt the standard PMT function for when interest was calculated on the 15th of each month on an ACT/360 basis. Well, there wasn"t a way to adapt the conventional financial math, but using Business Functions" daycount methodology combined with its solver produced a highly accurate and efficient solution, eliminating the need for separate spreadsheets for each loan.
|Functions in the Annuity Extended family (3)|