Solved

Saving Calculation Question

Posted on 2016-08-11
5
35 Views
Last Modified: 2016-08-30
I inherited a report with the following formula for savings.

=(a2)/(1-6.8%)-a2  where 6.8% is the savings rate

When I calculate savings I was doing a2*6.8%. Anyone know what they were trying to accomplish? You get slightly different numbers.
0
Comment
Question by:kwarden13
  • 3
5 Comments
 
LVL 27

Assisted Solution

by:d-glitch
d-glitch earned 125 total points (awarded by participants)
ID: 41752315
If a2 is the amount you have now
(a2)/(1-6.8%) is the amount you had a year ago
and (a2)/(1-6.8%)-a2 is the amount of interest you received last year.

This assumes no monthly compounding and is probably not the right way to do the calculation.
0
 
LVL 4

Accepted Solution

by:
Alexandre Michel earned 250 total points (awarded by participants)
ID: 41752321
Your formula  is used to calculate the discount on the original price
The formula above uses the discounted price and calculated what the discount was

e.g.
Original price = $100, discount = 100 * 0.068 = $6.80.
Then Discounted price is $100-$6.80= $93.20

Formula above starts with the discounted price

( 93.20 / (1-0.068) ) - 93.20 = ( 93.20 / 0.930 ) - 93.20 = 100 - 93.20 = 6.80
 
Hope this helped
0
 
LVL 27

Expert Comment

by:d-glitch
ID: 41752323
>>  and (a2)/(1-6.8%)-a2 is the amount of interest you received last year.

That should be paid out not  received  since it will be negative.
0
 
LVL 27

Assisted Solution

by:aburr
aburr earned 125 total points (awarded by participants)
ID: 41752715
both equations are exactly the same.
Put them equal to each other and simplify
0
 
LVL 27

Expert Comment

by:d-glitch
ID: 41776030
I was invited to help close this.  I believe it is resolved.
0

Featured Post

Is Your Active Directory as Secure as You Think?

More than 75% of all records are compromised because of the loss or theft of a privileged credential. Experts have been exploring Active Directory infrastructure to identify key threats and establish best practices for keeping data safe. Attend this month’s webinar to learn more.

Question has a verified solution.

If you are experiencing a similar issue, please ask a related question

Suggested Solutions

Introduction This Article briefly covers methods of calculating the NPV and IRR variants in Excel as well as the limitations in calculating and interpreting IRR results. Paraphrasing Richard Shockley, author of my favourite finance reference tex…
: Microsoft Office Collaborate for free and online versions of Microsoft  Word, Excel, Powerpoint, OneNote, Onedrive , Email, Calendar etc. In short we can say that Microsoft office is a suite of servers, applications and services developed by  Micr…
This Micro Tutorial will demonstrate the scrolling table in Microsoft Excel using the INDEX function.
Excel styles will make formatting consistent and let you apply and change formatting faster. In this tutorial, you'll learn how to use Excel's built-in styles, how to modify styles, and how to create your own. You'll also learn how to use your custo…

863 members asked questions and received personalized solutions in the past 7 days.

Join the community of 500,000 technology professionals and ask your questions.

Join & Ask a Question

Need Help in Real-Time?

Connect with top rated Experts

28 Experts available now in Live!

Get 1:1 Help Now