In this module we are going to look at some of the advanced functions that are available in Excel. We are going to look at the time value of money and how it affects saving, borrowing and long range planning.

In our budget module we looked at cash flow, which was having enough money to meet expenses. When you have more money than you need, you can save it. If you save it in a bank, the bank pays you for the use of your money. This is called interest. This interest is added to the original sum you gave to the bank, and adds to your savings. This is sometimes called the time value of money. The longer you save, the more your money grows.

Your local bank provides several ways you can save money such as savings accounts, money market accounts, and certificates of deposit (CD's). Each method of saving can have a different interest rate. In this exercise you will see how your money grows at different interest rates for different amounts of time. You will create a worksheet that shows how $1000 grows after one year at different rates. Trainer Note: Hyperlink to Money Mgmt-Interest Rates worksheet. Point out that there is no formula in the B column. Where did the $1030 come from in B4? We used a function.