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PMT function in Excel


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PMT function in Excel

The PMT (Payment) function, one of Excel's financial functions, can be used to calculate the payments for a loan or the future value of an investment. In other words for calculating the payment for a loan based on constant payments and a constant interest rate PMT function used.

 Syntax

PMT(rate,nper,pv,fv,type)

 

Rate     is the interest rate for the loan.

 

Nper     is the total number of payments for the loan.

 

Pv     is the present value, or the total amount that a series of future payments is worth now; also known as the principal.

 

Fv     is the future value, or a cash balance you want to attain after the last payment is made. If fv is omitted, it is assumed to be 0 (zero), that is, the future value of a loan is 0.

 

Type     is the number 0 (zero) or 1 and indicates when payments are due.

 

Steps are given below

 

Step 1: First create one excel sheet as below

 

PMT function in Excel

 

Step 2:  Now apply PMT formula as below

PMT function in Excel

Note:

If you make monthly payments on a four-year loan at an annual interest rate of 12 percent, use 12%/12 for rate and 4*12 for nper. If you make annual payments on the same loan, use 12 percent for rate and 4 for nper.

Step 3: Now press enter button and calculate amount of loan payment.

PMT function in Excel


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