Financial Calculator or Microsoft Excel – Which is to be used? | ApnaCourse
There is always this discussion in any forum – whether to use financial calculator (FC 200V) or Microsoft Excel to solve the numerical questions in the CFP/ CWM examination. Here are few important points that can be noted.
- Financial Calculator (FC 200V) – Very handy and built in formulae will definitely help us save time in many situations. The CMPD function is the one that is mainly used in the financial calculator as far as the CFP/ CWM examination is concerned. The ease with which one can use this is unmatched with any other instrument. There would be situations where P/Y would be different from C/Y and that is where the importance of Financial Calculator arises. Microsoft Excel assumes P/Y = C/Y and hence certain questions cannot be solved using excel. On the other hand, financial calculator is quite easy to navigate between the various parameters of CMPD function. Any combination can be solved effortlessly. However, one major drawback in the financial calculator is the situation where we have irregular cash flows.
- Microsoft Excel / Open Office – This is the tool that is practically used at our work. Lot of functions are in-built and we may directly use the functions relevant to us. The best part about Microsoft Excel is that it prompts / gives description of the field that the user is trying to fill-in. Therefore, the user need not remember what to fill-in in which row. Excel would provide that information to the user! Also, in case of irregular cash flows, it is ideal to use excel. One has to fill-in the corresponding dates along with values (all outflows in negative and all inflows in positive) and apply the respective formula. It is one of the best methods to find results such as IRR, XIRR, Bond yields, etc. Individuals who aren’t comfortable using “AMRT” in calculator, can easily draw the entire amortization table in excel within seconds!
Overall, it is recommended that one knows both financial calculator and Microsoft Excel/ Open Office. It is even important to know which instrument to use for which type of question in the examination. The best way to know this is to solve same set of questions with both Financial Calculator and Microsoft Excel/ Open Office. It will bring out lot of insights that would give a lot of clarity on this matter.
So, which one is to be used in the examination? – the answer is “BOTH”!!