Financial Functions Walkthrough: PMT, NPV, IRR
Use finance formulas correctly with examples.
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Teach me to use financial functions correctly, with examples I can check by hand. App: [SPREADSHEET_APP]. My scenario (loan, investment, project cash flows): [SCENARIO]. Numbers: [NUMBERS]. This is an educational walkthrough, not financial advice. For each function, give a table row and a worked example: Function | Purpose | Syntax | Inputs from my scenario | Result | Sign convention | Common mistakes. Cover: PMT, IPMT, PPMT for loan payments; FV and PV; NPER and RATE; NPV (and the common mistake of including the time-zero cash flow inside the function); IRR and XIRR for irregular dates; and a compare-two-options example. Explain periods and rates: convert an annual rate to monthly by dividing by 12 for nominal rates and note how effective rates differ; show payment timing (end versus beginning of period); sign conventions (money out negative, money in positive). Add a check method: build an amortization schedule for the first three payments and compare with PMT; verify NPV by discounting each cash flow manually. Include error cases (IRR needs at least one positive and one negative flow; multiple IRRs possible). Remind me to have an accountant or financial adviser who knows [JURISDICTION] verify any decision based on the output.
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