What is tadXL?

Welcome to tadXL.com, here you will find the Excel add-in that everyone is talking about. So what is tadXL add-in? you ask. The answer is that tadXL is a library of financial functions that you may use as Excel worksheet functions. There are over 90 such financial functions in tadXL v 2.0 that has been released on April 16, 2013. The older version of tadXL v 1.0 has been discontinued and from now on forward we will be only marketing tadXL v 2.0

Disadvantages of Excel

Why would you want tadXL if Excel has it's own set of financial functions? This question is answered by looking in to the limitations of Excel's own financial functions and the lack of many financial functions that are desired yet are not there in Excel itself. The financial functions in Excel work with the assumption that compounding of interest is periodic and offer no way to specify various compounding frequencies. The TVM functions in Excel namely RATE, NPER, PMT, PV and FV are not capable to calculate the results for annuities that are not in constant amounts. It would be desired of the TVM functions if it considered that annuity payments grow or shrink by a growth rate and annuity payment increases or decreases by a constant money amount. The former growth type is referred to as a geometric gradient and the latter is called a scalar gradient. Excel TVM functions are not programmed to find the present value, future value, annuity payment and the interest rate for growing, shrinking, increasing and decreasing annuities. Furthermore NPER function in Excel refers to number of periods, and that is it. The number of periods is a generic term whereas it would be of help if one could specify that a period is a year, quarter, month, week, day or anything else such as a biennial.

Financial analyst routinely perform business valuation and analyze invesments using various methods. But Excel has only three functions for investment analysis and these include IRR, MIRR and NPV. Even these three functions have severe shortcomings, take for example the NPV function which only calculates net present value for annuity with end of period payments. The other restriction in the 3 Excel investment analysis function has to do with way one can specify compounding of interest. The 3 named functions in Excel assume that interest compounding is periodic whereas one would desire to specify various sorts of compounding. Then Excel investment analysis functions do not permit defining a period and one is left with no choices in this regard.

Advantages of tadXL

This is where tadXL provides a solution by offering a 6th TVM function called the GRADIENT using which one can specify a growth rate or a money amount by which annuity payments grow, shrink, increase and decrease. All 6 TVM function in tadXL include this value for gradient that permits us to find the present value, future value, number of periods, the interest rate, and the growth rate for annuities that grow, shrink, increase and decrease. But tadXL doesn't stop here, the TVM functions in this package allow specifying annuity payments that never end. To do this you give a value of INF (short for infinity) to the NPER variable in PV and RATE functions of tadXL. This will permit you to find the present value and rate of return of perpetuities. A perpetuity is a series of periodic payments that go on for ever and one would desire having Excel find the interest rate and valuation of such never ending stream of payments. And tadXL makes this possible by use of a value called INF for the NPER variable in it's own TVM functions.

As I said earlier that Excel has only 3 functions to offer for investment analysis; in comparison tadXL offers you 60 yes I said sixty financial functions just for the purpose of analyzing investments. Actually there are 12 basic or fundamental investment analysis functions and the remaining 50 are variations of these cases when cash flows are not periodic, for incremental cash flows from multiple projects, expected values for the basic functions. You would also find functions for investment analysis when you have cash flows along with schedule of discount rates and schedule of dates. In short you would have plenty of functions to appraise investments.