Microsoft Office Tutorials and References

In Depth Information

**Using PV to Figure Out How Much House You Can Afford**

terest, you use 12% / 12 for guessand 4 × 12 for nper. If you make annual pay-

ments on the same loan, you use 12% for guessand 4 for nper.

Figure 13.3
shows how to calculate an interest rate.

Figure 13.3.

Figure 13.3.
Given the other terms for a loan, you can back into the interest

Given the other terms for a loan, you can back into the interest

rate with

rate with RATE

RATE..

Using

Using
PPV
to Figure Out How Much House You Can Afford

to Figure Out How Much House You Can Afford

If you are looking for a monthly house payment of $1,500 with a 15-year loan

at 3.2% annual interest rate, you can back into the loan amount by using the

PV function.

Syntax

PV(rate,nper,pmt,fv,type)

The PV function returns the present value of an investment. The present

value is the total amount that a series of future payments is worth now. For

example, when you borrow money, the loan amount is the present value to the

lender. This function takes the following arguments: