Microsoft Office Tutorials and References
In Depth Information
PV is calculated as follows:
Based on an
investment, PV returns the
present value. For
example, the total
amount you could
afford for a car loan.
RAT RATE returns per period the interest of an annuity.
The RATE function returns the interest on an annuity per period. The RATE function is calculated by
iterations and can have many solutions. If results of RATE do not converge within .00000001 after a
total of 20 iterations, the result returns #NUM . Notice the example in Figure 6.33. The number of
periods is 48 (a 4-year loan), the payment is $200 a month, and the present value of the loan is
$8,000. The monthly rate is .77%. Multiply the rate times 12 for the yearly rate as shown.
The number of total periods on an annuity.
The payment made each period and must remain constant. Typically, it
includes principal and interest.
The future value or cash balance you want to attain upon the last payment.
For a loan it would be zero.
The payment timing. When the payments are due.
What you assume the rate will be. If omitted, Excel assumes 10%.