Microsoft Office Tutorials and References

In Depth Information

**Tutorial C: Building a Decision Support System in Excel**

period interest rate. This formula is important to remember when you enter the business world, but for now

you will simplify the calculation by specifying one loan payment per year compounded annually. To put in

the payment formula, click cell C32, then click the fx symbol next to the editing window (circled in

Figure C-9). The Payment function is called PMT, so type PMT in the Insert Function window

—

you will

immediately see a short description of the function with its arguments, as shown in Figure C-9.

FIGURE C-9

Accessing the PMT function in Excel for cell C32

NOTE

Rate is the interest rate per period of the loan, Nper is an abbreviation for the number of loan periods, and Pv is an

abbreviation for Present Value, the amount of money you are borrowing “today.” The PMT function can determine a series of equal loan

payments necessary to pay back the amount borrowed, plus the accumulated compound interest over the life of the loan.