# Rate Function

Returns a Double specifying the interest rate per period for an annuity.

Syntax

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

The Rate function syntax has these arguments:

Argument

Description

nper

Required. Double 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. Double specifying payment to be made each period. Payments usually contain principal and interest that doesn't change over the life of the annuity.

pv

Required. Double 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's 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 Rate. 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, Rate cycles through the calculation until the result is accurate to within 0.00001 percent. If Rate can't find a result after 20 tries, it fails. If your guess is 10 percent and Rate fails, try a different value for guess.

## Example

Note: Examples that follow demonstrate the use of this function in a Visual Basic for Applications (VBA) module. For more information about working with VBA, select Developer Reference in the drop-down list next to Search and enter one or more terms in the search box.

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).

``` Dim Fmt, FVal, Guess, PValDim Payment, TotPmts, PayType, APR' When payments are made.Const ENDPERIOD = 0, BEGINPERIOD = 1 Fmt = "##0.00" ' Define percentage format.FVal = 0 ' Usually 0 for a loan.Guess = .1 ' Guess of 10 percent.PVal = InputBox("How much did you borrow?")Payment = InputBox("What's your monthly payment?")TotPmts = InputBox("How many monthly payments do " & _ "you have to make?")PayType = MsgBox("Do you make payments at the end " & _ "of the month?", vbYesNo)If PayType = vbNo Then PayType = BEGINPERIOD Else PayType = ENDPERIODEnd IfAPR = (Rate(TotPmts, -Payment, PVal, _ FVal, PayType, Guess) * 12) * 100MsgBox "Your interest rate is " & _ Format(CInt(APR), Fmt) & " percent." ```
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