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<< Click to Display Table of Contents >> RATE (interest rate per period) |
Syntax:
RATE(NPer, Pmt, PV [, FV] [, Type] [, Guess])
Description:
Returns an estimate for the interest rate per period of an annuity, based on an investment with periodic constant payments and a constant interest rate.
The function expects the following arguments:
NPer is the total number of payment periods.
Pmt is the payment made for each period.
PV is the present value.
FV (optional) is the future value (the total value after the last payment). If omitted, it will be set to zero.
Type (optional) is the timing of the payments:
0 or omitted: Payment at the end of each period.
1: Payment at the beginning of each period.
Guess (optional) lets you specify an estimate for the result (see note below).
Note:
The result of this function is calculated using an iterative search technique. If the function does not find a result with an accuracy of 0.00001% or better after 20 iterations, it aborts and the #NUM! error value is returned. If this occurs, try altering the Guess parameter.
Example:
RATE(12*10, -650, 60000) returns 0.455087%
This formula calculates the interest rate for a loan of € 60,000 with a term of 10 years (=12*10 months) and a payment of € 650.00 (per month) by using an iterative search technique.
The result is the interest rate per month. To obtain the annual interest rate, it must therefore be multiplied by 12.
See also: