RATE

See also A-Z Spreadsheet Function List

Description Returns the interest rate per period of an annuity, given a series of constant cash payments made over a regular payment period.

Syntax RATE(nper, pmt, pv [, fv] [, type] [, guess])

nper is the number of periods in the annuity.

pmt is the fixed payment made each period. Generally, pmt includes only principle and interest, not taxes or other fees.

pv is the present value of the annuity.

fv is the future value, or the amount the annuity will be worth. When you omit this argument, a future value of 0 is assumed.

type indicates when payments are due. Use 0 if payments are due at the end of the period or 1 if payments are due at the beginning of the period. When you omit this argument, 0 is assumed.

guess is your estimate of the interest rate. If no argument is supplied, a value of .1 (10%) is assumed.

Remarks RATE is calculated iteratively, cycling through the calculation until the result is accurate to .00001 percent. If the result cannot be found after 20 iterations, #NUM! is returned. When this occurs, supply a different value for guess.

See Also FV , IPMT , NPER , PMT , PPMT , and PV functions

Example RATE(48, -439.43, 18000) returns .0067 (rounded to 4 decimals), which is the monthly interest rate. The annual interest rate (.0067 multiplied by 12) is 8%.