PMT

Calculates the payment for a loan based on constant payments and a constant interest rate.

Syntax

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

For a more complete description of the arguments in PMT, see PV.

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.

Set type equal to

If payments are due

0 or omitted

At the end of the period

1

At the beginning of the period


Remarks

Examples

The following formula returns the monthly payment on a $10,000 loan at an annual rate of 8 percent that you must pay off in 10 months:

PMT(8%/12, 10, 10000) equals -$1,037.03

For the same loan, if payments are due at the beginning of the period, the payment is:

PMT(8%/12, 10, 10000, 0, 1) equals -$1,030.16

The following formula returns the amount someone must pay to you each month if you loan that person $5,000 at 12 percent and want to be paid back in five months:

PMT(12%/12, 5, -5000) equals $1,030.20

You can use PMT to determine payments to annuities other than loans. For example, if you want to save $50,000 in 18 years by saving a constant amount each month, you can use PMT to determine how much you must save. If you assume you'll be able to earn 6 percent interest on your savings, you can use PMT to determine how much to save each month.

PMT(6%/12, 18*12, 0, 50000) equals -$129.08

If you pay $129.08 into a 6 percent savings account every month for 18 years, you will have $50,000.