RATE
The RATE function returns the interest rate per period of a loan or an investment.
Syntax
RATE (Nper, PMT, PV?, FV?, Type?, Guess?) - > Number
Arguments
| Arguments | Datatype | Description |
|---|---|---|
Nper | Number | The total number of periods. |
PMT | Number/ Node reference | The payment made each period. |
PV? | Number/ Node reference | The total amount that a series of future payments is worth now. |
FV? | Number/ Node reference | The future value or a cash balance you want to attain after the last payment is made. This is an optional argument. |
Type? | Number | Indicates when the payments are made. Type is zero if payments are made at the end of the period and non-zero if payments are made at the start of the period. |
Guess? | Number | Estimate of what the rate will be. This is an optional argument. |
Example
Consider a series of $2000 payments made at the end of each month for 1 year. The objective is to calculate the interest rate per month where the present value is $20,000.
| Periods | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Present Value | -20000 | - | - | - | - | - | - | - | - | - | - | - | - |
Payments made | - | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 |
To calculate the Interest Rate, the formula should be:
RATE(12,[Payments made],[Present Value],0)
Result
The interest rate is calculated to be 2.92%
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