How to Create an Amortization Calculator

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A step-by-step tutorial on how to create an amortization calculator in a spreadsheet

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How to Create an Amortization Calculator

  1. 1. 1 How to Create an Amortization Calculator Sid MacatolSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  2. 2. 2 Amortization? . . . what you pay the bank monthly for your loanSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  3. 3. 3 What Loan?   OUSING LOAN H   AR LOAN C   HATEVER LOAN WSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  4. 4. 4 Why Compute?   o forecast T   o verify T   o decide T   o plan TSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  5. 5. 5 Software to Use   icrosoft Excel M   oogle Spreadsheet G   pen Office Spreadsheet OSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  6. 6. 6 Open a blank spreadsheetSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  7. 7. Bring mouse pointer to this 7 border ✚Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  8. 8. Click and drag to widen 8 column ✚Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  9. 9. Type the following under 9 Column ASid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  10. 10. Type the following under 10 Column BSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  11. 11. 11 Select the indicated cellsSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  12. 12. 12 Click on the Font Color iconSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  13. 13. 13 Click on the Blue colorSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  14. 14. Blue reminds you that these 14 are VariablesSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  15. 15. 15 Variables?  data that you can manually change anytime in the computationSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  16. 16. 16 Loan Amount   epends on how much you need AND D what the bank is willing to lendSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  17. 17. 17 Annual Interest Rate   epends on what the bank offers DSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  18. 18. 18 Payment Period   epends on bank policy and your D preferenceSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  19. 19. 19 The following slides are for Microsoft Excel and Open Office SpreadsheetsSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  20. 20. 20 I’ll describe a similar procedure for Google Spreadsheet laterSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  21. 21. 21 Select the indicated cellsSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  22. 22. Click “Insert” at the Main 22 MenuSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  23. 23. Select “Name” on drop down 23 menuSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  24. 24. 24 Select “Create”Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  25. 25. 25 Check “Left Column”Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  26. 26. 26 Click “OK”Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  27. 27. 27 You’re back hereSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  28. 28. 28 WAIT A MINUTE! What did we just do?Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  29. 29. 29 We created names for the cellsSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  30. 30. 30 Cell names make computations easier to understandSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  31. 31. 31 Cell B2 . . . =LOAN_AMOUNT NOTE: SPACES BECOME UNDERSCORESSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  32. 32. 32 Cell B3 . . . =ANNUAL_INTEREST_RATE NOTE: SPACES BECOME UNDERSCORESSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  33. 33. 33 Cell B4 . . . =PAYMENT_PERIOD_IN_YEARS NOTE: SPACES BECOME UNDERSCORESSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  34. 34. 34 The following slides are for Google SpreadsheetSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  35. 35. 35 It’s a longer procedure that you can also do in Excel and Open OfficeSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  36. 36. 36 Click on Loan AmountSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  37. 37. 37 Click ‘Edit’Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  38. 38. 38 Click ‘Named ranges’Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  39. 39. 39 Click ‘Define new range’Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  40. 40. 40 Type LOAN_AMOUNTSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  41. 41. 41 Click ‘Save’Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  42. 42. There’s the range name you 42 just definedSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  43. 43. 43 Click ‘Done’Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  44. 44. 44 Click on the interest rateSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  45. 45. 45 Click ‘Edit’Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  46. 46. 46 Click ‘Named ranges’Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  47. 47. 47 Click ‘Define new range’Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  48. 48. Type 48 ‘ANNUAL_INTEREST_RATE’Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  49. 49. 49 Click ‘Save’Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  50. 50. 50 Click ‘Done’Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  51. 51. 51 Click on payment periodSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  52. 52. 52 Define new rangeSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  53. 53. Type 53 PAYMENT_PERIOD_IN_YEARSSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  54. 54. 54 Click ‘Done’Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  55. 55. 55 Now you have your cell range names in placeSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  56. 56. 56 Proceed to Cell B5Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  57. 57. 57 Type =PMT(Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  58. 58. 58 See this?Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  59. 59. 59 In Open OfficeSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  60. 60. 60 In Google SpreadsheetSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  61. 61. It tells us what to put into the 61 formulaSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  62. 62. 62 Rate   his is the Interest Rate TSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  63. 63. 63 nper   his is the payment period TSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  64. 64. 64 pv   his is the loan amount TSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  65. 65. 65 [fv] and [type]  gnore these for now I   hey are optional TSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  66. 66. 66 Everything makes sense so far?Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  67. 67. 67 Before moving on…   emember that we are after R MONTHLY AMORTIZATIONSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  68. 68. 68 Remember this?Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  69. 69. 69 Therefore #1 . . .   ate must be in terms of interest rate R per monthSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  70. 70. 70 Therefore #1 . . .   ate must be in terms of interest rate R per month  nside the formula, we divide the I annual interest rate by 12Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  71. 71. 71 Therefore #2   ayment period must also be in P monthsSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  72. 72. 72 Therefore #2   ayment period must also be in P months  nside the formula, we multiply I payment period in years by 12Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  73. 73. 73 Here’s the “rate” =PMT(annual_interest_rate/12, payment_period_in_years*12, loan_amount)Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  74. 74. 74 Note for Open Office   ust replace commas with semi-colons JSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  75. 75. 75 Note for Open Office   ust replace commas with semi-colons J   ormula appears like this: F =PMT(annual_interest_rate/12; payment_period_in_years*12; loan_amount)Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  76. 76. 76 Here’s “nper” =PMT(annual_interest_rate/12, payment_period_in_years*12, loan_amount)Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  77. 77. 77 Here’s “pv” =PMT(annual_interest_rate/12, payment_period_in_years*12, loan_amount)Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  78. 78. Here’s how it looks in the 78 spreadsheetSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  79. 79. 79 Let’s zoom in a bitSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  80. 80. 80 In Open Office Notice the semi-colon instead of the comma in between variablesSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  81. 81. 81 In Google SpreadsheetSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  82. 82. You now have your monthly 82 amortizationSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  83. 83. Change the payment period 83 to 20 yearsSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  84. 84. Amortization lowers only 84 slightlySid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  85. 85. Stick to 15 years but go for 85 9% interestSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  86. 86. Monthly amortization is P600 86 lower! Negotiate once, enjoy P600 savings a month for 15 years. Not bad!Sid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  87. 87. 87 You set this AMORTIZATION CALCULATOR only onceSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  88. 88. 88 You’ve got it for lifeSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  89. 89. 89 Enjoy the power of knowing your own numbersSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
  90. 90. 90 Thanks for watching the slides. Polite comments are welcome at http://virtualsidekick.blogspot.com You may follow me at: http://www.google.com/profiles/sid.macatol Dream a life! Live your dreams! Sid MacatolSid Macatol - How to Create an Amortization Calculator Dec 10, 2010
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