The computational tool of choice for this course is Microsoft
Excel. This program is widely used and is available for Windows and Mac
OS. The factor formulas can be computed directly in Excel
and the program includes a number of built in financial functions.
We illustrate these later on this page, but in this paragraph
we describe our recommended tool, the Economics add-in. This
add-in is fully described on the ORMM site. Click the icon
to go to that site.
In order to use the add-in, you will have to download it from
that site. The link below takes you to the download page. Before
attempting to install and use the add-in read the instructions
on that page.
The figure below shows equivalence factors for 10% interest
and 10 years as computed by the add-in. They are evaluated with
formulas placed in column U. The formulas entered in column U
are shown in the yellow field to the right. Each function has
two arguments, the interest rate in cell U3, and the time interval
in cell U4. The last two letters of the the function name identifies
its purpose. For example FP computes the F/P function. Note that
the arguments of the functions are references to cells U3 and
U4. It is much better to reference the data cells that to place
numerical values of the arguments directly in the function statement.
The functions are User Defined functions. The User
Defined list is accessed through the Insert/Function menu
item or the insert function icon on the Standard
Toolbar. The functions associated with the Economics add-in
are prefaced by "E_".
Clicking the icon opens a page
that gives instructions and examples for the functions.
It may seem inconvenient to use the add-in at this point because
other methods can be used to compute the factors. Other features
of the add-in will be used extensively in other parts of this
course, and a little effort spent now will bear fruit later.