12.2 Financial and Discounting functions
These are the financial functions including the discounting options which are available in TreeAge Pro. You use the function (in the left hand column) and the right hand column will explain the output you receive. The formula describe how the values you enter into the function are used in the calculation.
A few points to note:
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In functions, a “rate” argument can be entered as either a percent or a decimal. For example, eight percent can be represented as either “8%” or “0.08,” but not simply as “8.”
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Very small percentages such as ".08%" should be entered as "0.08%".
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References to periods/payments specifically mean the number of periods/number of payments.
| Function | Explanation |
|---|---|
| Annuity(rate; periods) | To calculate the net present value of a series of equal future payments, multiply the Annuity function by the amount of a single payment.
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| Compound(rate; periods) | Returns the compound interest rate (effective yield) at a fixed rate over a fixed number of periods. If used as a multiplier, this function can be used to calculate future value; if used as a divisor, it can be used to calculate discounted, present value. |
| Discount(value; annual_rate; time_period) | Discounts a specific value (cost or utility) to account for the discounting of the present value of future values. The value is the value to be discounted. The annual_rate is the annual discount rate. The time_period is the future time when the value is applied in the model in years. Note in a Markov Model the time_period is usually a function of _stage. |
| DiscountCont(util; rate; time_start; time_end) DiscountContDES(util; rate) |
Discounts a specific value (cost or utility) at the specified rate on a continuous basis for DES models.
DiscountCont requires that you provide the start and end time in years. DiscountContDES uses the defaults of _prior_time and _time for the start and end time. This only works correctly if the time measurement is annual. |
| FV(pmt; pv; rate; payments) | Returns the future value of a series of equal, periodic payments. The “pv” parameter represents an initial payment. |
| NPV(rate; LIST of flows) | Returns the net present value of periodic cash flows, discounted.
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| PMT(principal; rate; term) | Returns the size of equal, periodic payments required to pay off a loan, given the principal, interest rate, and term of the loan. |
| PV(pmt; fv; rate; payments) |
Returns the present value of equal, periodic payments at a fixed interest rate. The “fv” parameter represents a final payment.
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