 So one of the things we're going to do is we're going to actually take a step back and we're going to revisit The PMT function and we're actually going to revisit a few of these functions because that's actually one of the Hallmarks of Excel is it has all these mathematical equations stored in it One of them was that we learned in chapter 4 the PMT function now The PMT function worked where you gave it something known as a present value say for example Jarrell's restaurant wants to Take out a loan $400,000 We want to pay it off and we want to pay it off in five years Quarterly we want to Unlike, you know some loans where you have to pay back every month Drell's loan for the restaurant wants to be I'm gonna make payments every three months So it's gonna be a quarterly payment Which tells me all of a sudden that e8 times f8 Number of years times the number of payments per year is gonna Resulting my in-per for PMT. It's gonna tell me how many payments. I'm gonna have over the life of this loan Now the annual rate. We actually already built up. It's gonna be our C5 one of the things I can do is I can hit f4 To once again make that an absolute cell reference Now one of the things to take note of is since we're going to be dealing with a seven percent annual interest rate That keyword was annual. What happens if I want to go ahead and apply Some of the interest rate over the course of the loan, you know, I make a payment in June I should have some interest be applied After June and before June but on a new loan basis What I can do is I can take this annual interest rate this h8 that we've just referenced and I can divide it by How many loans I plan on making a year? for This says that basically now Across the life of the loan before I get to any new segment pay period of the loan I should have roughly speaking one point seven five percent of my interest of the year be applied Now that I've built all of this out all these kind of Plug-and-play number systems what I can do is I can come in here and I can actually set my PMT Notice again, Excel is going to give me a little dialogue box Explaining my PMT and as soon as I open up with a parentheses I get a number of options the first thing I need to do is my rate my i8 The second thing I need to do is my in per my g8 and then finally my pv My pv is my present value like how much I'm actually getting in my loan Now you see I do have a few different options fv and type and we'll actually skip over this because those are Optional tags as soon as I close off this and I see I hit my inner button I see that it would take me about $24,000 every three months to help pay back this loan in five years That's a lot of money. I don't have that kind of money. Maybe instead of being an ambitious Restaurant tour maybe I decide that drills restaurant should maybe play it a little bit more on the conservative side Maybe not you know trying to burn out all the money right away So suddenly what I'm gonna say is I Want to limit my quarterly payment? I'm willing to pay back my loans at $15,000 a quarter. Okay. I still want to do my 400,000 Business loan. I think that's still respectable, but I'm gonna skip over future value I want to actually see what the future value of this loan will be. I still want to pay it back in five years I still want four Years each and I'm actually gonna cheat. I'm gonna come over here and I'm going to auto fill these downward Because this is a calculation relative. This is an absolute cell reference. This is a relative calculation They all fall in the place Now one of the things I can do you notice up here. I'm in my formulas tab One of the things that I can do is I can actually instead of going into logical like we were doing last week I can come over here to financial and I should see an FV option When I click on FV all of a sudden you see that I get Some new options with the same kind of key words because what happens is this is sort of the what if I don't finish the loan I want to have an ending result. What will be my loan if my rate is I nine my number of payments is still 20. I'm making 20 payments My payments and something that we had to calculate before I don't know Now the last thing I need to do is I need to also factor in this PV this optional tag I need to say what was my present value? Initially well, it was initially a four thousand dollar loan And so you'll see all of a sudden I've got a good chunk of a negative number here and when I hit, okay It makes perfect sense. I Want the same loan amount? I want to pay back at the same number of times at the same rate But I don't want to do it as fast as you're telling me to So I'm gonna still own Pretty much over a half of the the loan after five years So, okay, I still want to do these 15,000 payment that's still a sorry negative 15,000. I still want to do that I still want to apply the same interest rate of 1.75 sorry Because I still want the same Four years. There we are. I still want to pay you know four times across X number of years. We're actually going to skip over this for a second at 400,000 dollars So all of a sudden in per Again, like I was saying we have all of these different mathematical equations That have already been built for us these more accounting functions if you will again I need to figure out the number of payments if this is going to be sort of what I choose to do So in this case all of a sudden I can go and do in per Now in per again, you're gonna see that we have the same options rate PMT PV my rate still there my PMT Where are you and then my present value my 400,000? Again, I can close off that soon as I hit enter. We see suddenly I get a big number. I get 36.23 Number of payments now we can round that down But what that basically means is if I'm only going to be paying quarterly that's how many payments I need to have which means That divided by this means suddenly it's gonna take me about nine years to pay off this loan Okay, maybe I still want to do my five years. I still want to pay quarterly. I still want to do obviously the 20 Payments and I still want to do my interest rate and I still want to do all this stuff With this this is all I can break even with so if this is all the case still want to pay it off, too How much should I take off as a loan? How much can I really afford on my loan? How much can I take well again now? We're looking at PV the same thing we did with future Value FV in per number of payment in PMT We have a function available that allows us to do that again financial we head down to our PV section in The same thing happens. What's our rate? What's our number of payments? What's our PMT? What's our rate? What's our number of payments? What's our PMT? What's our payments per month? And now what we can see is when I hit something like okay You see that our loans a little lower. It's not as big as I was really hoping as you can see But maybe it's something we need to factor in on our end a little more