Rate

Specifies the interest rate per period for an annuity.

Syntax

Rate(nper, pmt, pv[, fv[, type[, guess]]])

The Rate function has the following named arguments:

nper

Required. Variant specifying 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

Required. Variant specifying payment to be made each period. Payments usually contain principal and interest that does not change over the life of the annuity.

pv

Required. Variant specifying 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

Optional. Variant specifying future value or cash balance you want after you make the final payment. For example, the future value of a loan is $0 because that is its value after the final payment. However, if you want to save $50,000 over 18 years for your child's education, then $50,000 is the future value. If omitted, 0 is assumed.

type

Optional. Variant specifying a 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

Optional. Variant specifying value you estimate will be returned by the Rate function. If omitted, guess is 0.1 (10 percent).

Remarks

An annuity is a series of fixed 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, the Rate function cycles through the calculation until the result is accurate to within 0.00001 percent. If Rate cannot find a result after 20 tries, it fails. If your guess is 10 percent and Rate fails, try a different value for guess.