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# Top 4 Most Important Financial Excel Formulas Explained

Whether you’re looking to get ahead in business or simply keep better track of your bank accounts, knowing your way around a Microsoft Excel spreadsheet will take you far. That’s easier said than done, however. According to the Houston Chronicle, Microsoft Excel employs 53 functions for financial calculations alone — everything from annuities to car loan payments.

How do you work your way around everything Excel has to offer? We’ve compiled the top four important Excel formulas to help you get your finances under control. Whether you are buying a car or investing for the future, these hacks will help you stay on top of your finances.

## The Best Excel Financial Functions

### 1. Payment Function

=PMT(rate, nper, pv, [fv], [type])

• Rate: enter the interest rate divided by the payments per year you make. For example 10% interest on monthly payments would be .1/12
• Nper: This is the total number of payments for the loan.
• PV: This is the current or present value of the loan.
• FV: This is the target balance (in most cases zero, but that can be changed for complex strategies)
• Type: Use 1 if your payments are at the beginning of each period, or use 0 if your payments are at the end of the period.

Click here to read more about PMT Function Explained

### 2. Rate Function

=RATE(nper, pmt, pv, [fv], [type], [guess])

• PV : is the present value.
• FV : is optional. It is the future value. If this parameter is omitted, the RATE function assumes a FV value of 0.
• Type : is optional. It indicates when the payments are due. If the Type parameter is omitted, the RATE function assumes a Type value of 0.
• Estimate : is optional. It is your guess at what the rate will be. If this parameter is omitted, the RATE function assumes an Estimate of 10%.

Click here to read more about Rate Function Explained

### 3. If Function

=IF( condition, [value_if_true], [value_if_false] )

• condition : is the value that you want to test.
• value_if_true : is optional. It is the value that is returned if condition evaluates to TRUE.
• value_if_false : is optional. It is the value that is return if condition evaluates to FALSE.

Click here to read more about IF Function Explained (with FAQs)

### 4. The Effect Function

=EFFECT(nominal_rate, npery)

• nominal_rate : The interest rate for the year.
• npery The number : of compounding periods per year.

Returns the effective (or annual) interest rate given a nominal interest rate.

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