Often, we have no activity on a loan or an investment but we want to know the amount of interest that is accruing or compounding. You can trigger the interest to appear by adding events such as a Payment or Invest for a $0 amount. This causes TValue to calculate the interest and, depending on the compute method, either add it to the principal if you are using Normal (compound interest) or to the accrued interest balance if you are using US Rule (simple interest).

In reviewing the 2017 Berkshire Performance summary, you would be amazed at the impact that compounding has over a number of years. In their report, they show three return calculations: the Berkshire per share “book value” which was a 19.1% compounded annual return, the Berkshire per share “market value” which was a 20.9% compounded annual return, and the S&P 500 compounded annual return of 9.9%. These were from August 31, 1964 to December 31, 2017.

Have you ever had a detailed Excel schedule that you would like to copy into TValue? With TValue 6, pasting cells from Excel into the TValue cash flow lines is easy. The key is to have the Excel schedule in the same format as TValue. What this means is the cells on a column in Excel need to match the order of fields on a TValue cash flow line.  This order is Event | Date | Amount | Number | Period | End Date | Memo. At a minimum, which is what most people need, the first column in Excel should contain the Event name, the second column should contain the Date, and the third column should contain the Amount.  Then you can copy those cells from Excel, go to TValue 6, put the mouse on the first cell you want to paste, and click on the Paste icon on the left-hand side. When a Rate Change event, Loan Details, and/or Special Series is added, additional columns may be needed.

There are some penalties that are pretty straight forward and then there is the IRS Failure to File (FTF) penalty 6651(a)(1).  The FTF is a 5% per month penalty to a maximum of 5 months or 25% from the due date or the extension date, whichever is later. If the FTF and the Failure to Pay (FTP) penalty run simultaneously, you only pay 4.5% for the FTF penalty and it caps out at 22.5% as the IRS is limiting the combination of the two penalties to 5% overall.  That is the good news.

A customer recently asked how to use TValue to determine the balance and annual interest contributions if they invested $100,000 in an annuity that was compounded annually for 15 years.