Description
Calculate the interest rate per period charged on a loan or the rate of return needed to reach a specified amount on an investment over a given period.
Signature
Annuity_Rate(nper, pmt, pv, [fv], [type], [guess])
Parameters
| Name | Required | Type | Description |
|---|---|---|---|
| nper | Yes | double | Total number of payment periods in the annuity |
| pmt | Yes | double | Payment to be made each period |
| pv | Yes | double | Present value, of a series of future payments or receipts |
| fv | No | double | Future value you want after you make the final payment (Defaults 0) |
| type | No | int | Indicates when payments are due. Use 0 for payments due at the end of the payment period. Or 1 due at the beginning of the period (Defaults 0) |
| guess | No | double | Value you estimate will be returned by the function (Defaults 0.1) |
Example 1
Annuity_Rate(60, -100, 5000) Returns 0.006183
Example 2
You are taking out a loan of $5,000. The loan term is 5 years and payments are made monthly (60 payments). Loan payments are $100 per month. What would the yearly interest rate be for this loan?
Annuity_Rate(60, -100, 5000) * 100 * 12 Returns (7.42% yearly)
The function returns the monthly rate so we multiply by 100 to percentage & 12 to get yearly.