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Using Financial Functions Test

Free Online Microsoft Excel Tests
Excel 2010 Training - Formulas and Functions

* Overview of the PMT Function
* Calculate Monthly Payments (PMT)
* Calculate Interest Rate (Rate)
* Calculate Number of Payments (NPER)
* Calculate Amount You Can Afford to Loan (PV)

10 Question Multiple Choice Quiz with Answers
and Answer Explanations



Using Financial Functions Test

1) What does the PMT function in Excel calculate?
a) It calculates a monthly salary based on interest rates, years of employment and bonuses.
b) It calculates the payment of a loan based on constant payments and a constant interest rate.
c) It cleans up data that has been incorrectly entered.
d) None of the options listed above are correct.

Question 2 - Using Financial Functions Excel Test

2) Study the screenshot above.  Which of the following formulas, if entered into the highlighted cell (B4), will calculate the total number of payments or months that the loan will be paid off over?

a) =PMT(B2,B3,B5)
b) =PV(B2,B3,B5)
c) =NPER(B3,B2,B5)
d) =PMT(B3, B2,B5)

Question 3 - Using Financial Functions Excel Test
3) Study the screenshot above.  Sanjev wishes to purchase a plot of land.  His bank’s annual fixed interest rate is 28%. What is the value he needs to enter in cell B3 (the highlighted cell) in order to calculate his monthly payments (PMT)?
a) 28%
b) 2.8%
c) 1.2%
d) 2.3%

4) Which of the following represents the correct syntax (arguments) for the PMT function?
a) =PMT(rate, nper, pv, [fv], [type])
b) =PMT(nper,rate, pv, [fv], [type])
c) =PMT(rate, nper, [fv], [type])
d) All of the options above are correct.

Question 5 - Using Financial Functions Excel Test
5) Study the screenshot above.  Which of the following is the correct formula for calculating the monthly payments in the highlighted cell B2?
a) =PMT(B5,B4,B3)
b) =PMT(B3,B4,B5)
c) =PV(B3,B4,B5)
d) =MPMT(B5,B3,B2)


6) Sally wants to buy a car but is unsure how much she afford to make a loan for.  The maximum monthly payment she can afford is $780.  Her bank’s interest rate is 14% annually (fixed) if she pays off the loan over 5 years.  What is the maximum amount she can afford?  Use Excel to calculate this amount.

a) It is impossible to calculate based on the variables given in this question.
b) She can afford to make a loan for $53,352.05.
c) She can afford to make a loan for $46,800.03.
d) She can afford to make a loan for $33,522.07.

Question 7 - Using Financial Functions Excel Test
7) Study the screenshot above then recreate the table in your own version of Excel.  Carlos cannot afford to pay more than $500 per month on this loan.  If the number of payments is extended to 48 months, would he be able to afford the payments?
a) Yes, he will be able to afford it.  His monthly payment will be $483.15 based on the variables given.
b) No, he will not be able to afford it.  His monthly payment will be $683.16 based on the variables given.
c) Yes, absolutely.  His monthly payment will be exactly $500 based on the variables given.
d) It is impossible to calculate based on the variables given in this example.

Question 8 - Using Financial Functions Excel Test
8) Study the screenshot above.  When trying to calculate the amount he can loan.  Vladimir keeps getting a negative number for this (see highlighted cell).  What do you think is the problem?
a) The PMT value has not been entered as a negative amount.  It should be -$800.
b) The PV formula entered in the formula bar does not reference the correct cells.
c) Vladimir cannot afford the loan, this is why it is showing as a negative.
d) None of the options listed above are correct.


9)Which of the following scenarios will yield INACCURATE results long-term when using the PMT function.
a) Using an unequal number of months for the NPER.
b) When the interest rate changes every month.
c) When the monthly payment is the same every month until the loan is repaid.
d) When the interest rate is the same every month for the whole period.


Question 10 - Using Financial Functions Excel Test
10) Study the screenshot above.  Which of the formulas entered below will provide the same results as that of the PMT function above when entered into single cell on a separate worksheet (i.e. not in the table above)?
a) =PMT(0.24/12,5*12,5500)
b) =PMT(0.02,60,5500)
c) Neither of the above options is correct.
d) Both of the above options are correct.