RATE(nper, pmt, pv, [fv], [type], [guess])
The RATE function has the following arguments:
nper – Required. The total number of payments in an annuity.
pv – Required. The present value of the annuity. The present worth of a serious of all future payments now.
[fv] – Optional. The future value of the annuity. It is the cash balance that you want to attain after the last installment. If [fv] is omitted then
[type] – Optional. The argument used to specify when payments are due:
|Set type equal to||If payments are due|
|0 or omitted||At the end of the period|
|1||At the beginning of the period|
[guess] – Optional. It is the guess on the rate, default is 10%.
Suppose, you obtained a loan of $1000 with 5 annual equal installments of $300. The rate of interest for the loan will be calculated as under:
Result. the loan with above terms has the interest rate of 15% annually.
Suppose, you took a loan of $5000 with monthly payments of $300 each. The loan will be paid out in 5 years. the monthly interest rate for the loan will be calculated:
Result. Note that the payment terms of the loan are first converted in months by multiplying with 12.
PMT function is used to calculate the periodic payment for a loan.
NPER function returns the number of periods required to pay off a loan, given the constant payments and constant interest rate.