PMT

[exceldud]

Why is my answer in red? What did I do wrong?

I'm trying to figure out how much monthly car payments will be for a $15,000
car. with 48 monthly payments at an interest rate 14.9%

I put: 14.9%/12 in the rate box. 48 in Nper. and 15000 in Pv.

I end up with $416.70 in red print

 

[Mike H]

Hi,

You have to enter PV as a negative amount

=PMT(14.9%/12,48,-15000)

and your answer beccomes black!!
--
Mike

When competing hypotheses are equal, adopt the hypothesis that introduces
the fewest assumptions while still sufficiently answering the question.
Occam''''s razor (Abbrev)

 

[Bill Sharpe]

Why is my answer in red? What did I do wrong?

I'm trying to figure out how much monthly car payments will be for a $15,000
car. with 48 monthly payments at an interest rate 14.9%

I put: 14.9%/12 in the rate box. 48 in Nper. and 15000 in Pv.

I end up with $416.70 in red print

Not really wrong. The payment is just being shown as a negative number.
You can format negative numbers in four different ways, two of which
include a red font, or create your own format. See Excel help for
"negative numbers"

Bill

 

[Joe User]

I put: 14.9%/12 in the rate box. 48 in Nper. and 15000 in Pv.

F'getabout the Insert Function wizard. It is a self-limiting crutch that
you would do well to learn to do without. Just type functions into the cell
directly; for example, =PMT(14.9%/12,48,15000). You'll have to learn how
eventually anyway; no better time than the present. Use Excel Help to learn
how to use functions that are new to you.

I end up with $416.70 in red print

I presume you mean red font __and__ parentheses. That's Excel trying to
outsmart you, thinking it knows what you really want. It's often wrong.
Unfortunately, there is no way (that I know of) to disable this dubious
feature.

Take a look at the cell format (right-click the cell, click on Format Cells

Number). You will probably see that it is Currency instead of General (or

Number). At least, that is the case with the US flavor of Excel 2003. Now
click Number; you will probably also want to enter 2 decimal places and
select Use 1000 Separator.

Now you will see that the red font was simply the default way to show
negative currency. Probably not what you want. So you have a choice: enter
the formula =-PMT(14.9%/12,48,15000) or =PMT(14.9%/12,48,-15000).

The point is: cash flows are signed; they have direction. Outflows and
inflows should have opposite signs when they are used as arguments to Excel
financial functions. (But there are some inconsistencies. :-<) Which sign
to use for inflow or outflow is arbitrary.

The first formula (-PMT(...)) treats 15000 as an inflow and the PMT result
as an outflow. The second formulat(PMT(...,-15000) treats 15000 as an
outflow and the PMT as an inflow.

I prefer the latter because I prefer the results of financial functions to
always be positive. But that's just my personal style.


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