Returns the interest rate per period for an annuity.
Rate(nper, pmt, pv[, fv[, type[, guess]]])
The Rate function has these named arguments:
|
Part |
Description |
|
nper |
Total number of payment periods in the annuity. For example, if you make monthly payments on a four-year car loan, your loan has a total of 4 * 12 (or 48) payment periods. |
|
pmt |
Payment to be made each period. Payments usually contain principal and interest that doesn’t change over the life of the annuity. |
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pv |
Present value, or value today, of a series of future payments or receipts. For example, when you borrow money to buy a car, the loan amount is the present value to the lender of the monthly car payments you will make. |
|
fv |
Future value or cash balance you want after you’ve made the final payment. For example, the future value of a loan is $0 because that’s it value after the final payment. However, if you want to save $50,000 for your child’s education over 18 years, then $50,000 is the future value. If omitted, 0 is assumed. |
|
type |
Number indicating when payments are due. Use 0 if payments are due at the end of the payment period, or use 1 if payments are due at the beginning of the period. If omitted, 0 is assumed. |
|
guess |
Value you estimate will be returned by Rate. If omitted, guess is 0.1 (10 percent). |
An annuity is a series of constant cash payments made over a period of time. An annuity can be a loan (such as a home mortgage) or an investment (such as a monthly savings plan).
For all arguments, cash paid out (such as deposits to savings) is represented by negative numbers; cash received (such as dividend checks) is represented by positive numbers.
Rate is calculated by iteration. Starting with the value of guess, Rate cycles through the calculation until the result is accurate to within 0.00001 percent. If, after 20 tries, it can’t find a result, Rate fails. If your guess is 10 percent and Rate fails, try a different value for guess.
This example uses the Rate function to calculate the interest rate of a loan given the total number of payments (TotPmts), the amount of the loan payment (Payment), the present value or principal of the loan (PVal), the future value of the loan (FVal), a number that indicates whether the payment is due at the beginning or end of the payment period (PayType), and an approximation of the expected interest rate (Guess).
Const ENDPERIOD = 0, BEGINPERIOD = 1 ' When payments are made.= "##0.00" ' Define percentage format.= 0 ' Usually 0 for a loan.= .1 ' Guess of 10 percent.= InputBox("How much did you borrow?")= InputBox("What's your monthly payment?")= InputBox("How many monthly payments do you have to make?")= MsgBox("Do you make payments at the end of the month?", _
vbYesNo)PayType = vbNo Then PayType = BEGINPERIOD Else PayType = ENDPERIOD= (Rate(TotPmts, -Payment, PVal, FVal, PayType, Guess) * 12) * 100"Your interest rate is " & Format(CInt(APR), Fmt) & " percent."