This is the fourth in a series of VBA, User Defined Functions for Mortgage Backed Securities (MBS). The other three are, solve for price given yield , yield given price and Macaulay Duration . Actually the seventh UDF, if you include the functions solving for the market value of Servicing, IO, and PO). As was true of the previous three functions, it allows for a number of option. It also, as before, includes an amortization schedule as a proof of the function’s calculations.
Average Life is the average number of years that each dollar of unpaid principal remains outstanding, Computed at the average time to the receipt of all future principal payments due to be paid.
Neither Servicing Fee nor Loss Severity are asked for in this function. They do not affect average life.