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<< Click to Display Table of Contents >> RATE (interest rate per period) |
Syntax:
RATE(NPer, Pmt, PV [, FV] [, Type] [, Guess])
Description:
This returns an estimate for the interest portion of the payment per period, based on an investment with periodic constant payments and a fixed interest rate.
The function expects the following arguments:
NPer is the total number of payment periods.
Pmt is the annuity (payment made for each period).
PV is the present value (initial amount)
FV (optional) is the future value (the total value after the last payment). If the argument FV is 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 of how high the interest rate is likely to be (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 specifying a different value for Guess.
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) using an iterative search technique.
The result is the interest rate per month. To obtain the annual interest rate, it must thus be multiplied by 12.
See also: