Financial Calculators in Microsoft Excel
A discounted cash flow or DCF model is a style of calculation that links streams of future money flows to lump sum amounts.
Discounted cash flow models have a range of practical applications, and are commonly used by economists, accountants, actuaries, engineers, business valuators, and other professionals.
Discounted cash flow modeling can easily be accomplished in Microsoft Excel, and can lead to better decision making in business and in life.
DCF Models for Business and Everyday Life
For example, a company may wish to finance a project if (and only if) the Internal Rate of Return exceeds 10% per year. The anticipated development costs for the project may be large for the initial year. On the other hand, significant revenues are anticipated for Year 2 onward.
The company directors rely on a DCF model to help determine whether or not the project's Internal Rate of Return exceeds their 10% threshold.
Discounted cash flow models also have applications in everyday life that are often overlooked. For example, consider automobile dealers who advertise low finance rates to prospective clients. From a car buyer's perspective, low finance rates are understood to be good, since they mean lower monthly payments. By using a DCF model, a buyer can determine the monetary value on the low finance rate offer.
Discounted cash flow models therefore allow us to make better decisions, both in business and in everyday life.
Note on Microsoft Excel Versions
All of the downloadable templates on DCF-Models.com are free, and have been saved in Excel 97-2003 file format. For security reasons, all templates are are "macro-free".
I recently switched to the new Excel 2010 and excel homework help, after a short adjustment period, I now consider myself a full convert. The menu layout is different from Excel 97-2003. The new Excel does add powerful new functions and features, and in my opinion is well worth the upgrade.
Specifications on Excel 2010 can be found at the Microsoft Store.