PMT function

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 the PV function.

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

  • The payment returned by PMT includes principal and interest but no taxes, reserve payments, or fees sometimes associated with loans.

  • Make sure that you are consistent about the units you use for specifying rate and nper. If you make monthly payments on a four-year loan at an annual interest rate of 12 percent, use 12%/12 for rate and 4*12 for nper. If you make annual payments on the same loan, use 12 percent for rate and 4 for nper.

Tip    To find the total amount paid over the duration of the loan, multiply the returned PMT value by nper.

Example 1

The example may be easier to understand if you copy it to a blank worksheet.

How to copy an example

  1. Create a blank workbook or worksheet.

  2. Select the example in the Help topic.

    Note   Do not select the row or column headers.

    Selecting an example from Help

    Selecting an example from Help

  3. Press CTRL+C.

  4. In the worksheet, select cell A1, and press CTRL+V.

  5. To switch between viewing the results and viewing the formulas that return the results, press CTRL+` (grave accent), or on the Formulas tab, in the Formula Auditing group, click the Show Formulas button.

1

2

3

4

A

B

Data

Description

8%

Annual interest rate

10

Number of months of payments

10000

Amount of loan

Formula

Description (Result)

=PMT(A2/12, A3, A4)

Monthly payment for a loan with the above terms (-1,037.03)

=PMT(A2/12, A3, A4, 0, 1)

Monthly payment for a loan with the above terms, except payments are due at the beginning of the period (-1,030.16)

Example 2

You can use PMT to determine payments to annuities other than loans.

The example may be easier to understand if you copy it to a blank worksheet.

How to copy an example

  1. Create a blank workbook or worksheet.

  2. Select the example in the Help topic.

    Note   Do not select the row or column headers.

    Selecting an example from Help

    Selecting an example from Help

  3. Press CTRL+C.

  4. In the worksheet, select cell A1, and press CTRL+V.

  5. To switch between viewing the results and viewing the formulas that return the results, press CTRL+` (grave accent), or on the Formulas tab, in the Formula Auditing group, click the Show Formulas button.

1

2

3

4

A

B

Data

Description

6%

Annual interest rate

18

Years you plan on saving

50,000

Amount you want to have save in 18 years

Formula

Description (Result)

=PMT(A2/12, A3*12, 0, A4)

Amount to save each month to have 50,000 at the end of 18 years (-129.08)

Note   The interest rate is divided by 12 to get a monthly rate. The number of years the money is paid out is multiplied by 12 to get the number of payments.

Applies To: Excel 2007



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