C
Charles van Doornewaard
According to the Help-files, the syntax for the above RATE function is:
RATE(nper,pmt,pv,fv,type,guess)
and I understand that with this syntax one should be able to figure out how
much percent interest is charged on a certain annuity loan given:
the number of payment periods
the amount of payment (annuity)
the pv or present value (I understand that should be equal to the sum of
money borrowed)
fv is the future value. I don't know why I should know that to calculate an
interest charged for I know the monthly payments and the sum of money
borrowed.
type is 0 or 1. I understand 0 means payments at the end of each period
(afterwards) and 1 is payment at the beginning of the period (in advance)
and guess. I don't know really what I should fill in this value.
The thing is this. Imagine there is a certain saving scheme whereby one
can lay in either in cash EUR 1,850.--. And at the end of a period of 7
years one is entitled to EUR 3,200.--. The interest is 8.14%. That is right
because 1850*(1.0814^7) is about EUR 3,200.--
But instead of EUR 1,850 one can also pay monthly EUR 32,-- for a period of
7 years (so 7*12 = 84 payments of EUR 32 each) and after the period the
capital has been completely paid and one is entitled to the end value of EUR
3,200.-- .
The EUR 32.-- monthly payment is an annuity loan. So that means that in each
EUR 32.-- there is a part redemption and a part of interest.
Now with the RATE function I was wondering if I could figure out at which
interest percentage the annuity is being charged. But if I susbsitute the
variables in the syntax for the following values:
=RATE(84,32,1850,3200,1,(0.0814/12))
then it returns #NUM!
Can anybody tell me exactly how I should use this formula?
Regards,
Charles.
RATE(nper,pmt,pv,fv,type,guess)
and I understand that with this syntax one should be able to figure out how
much percent interest is charged on a certain annuity loan given:
the number of payment periods
the amount of payment (annuity)
the pv or present value (I understand that should be equal to the sum of
money borrowed)
fv is the future value. I don't know why I should know that to calculate an
interest charged for I know the monthly payments and the sum of money
borrowed.
type is 0 or 1. I understand 0 means payments at the end of each period
(afterwards) and 1 is payment at the beginning of the period (in advance)
and guess. I don't know really what I should fill in this value.
The thing is this. Imagine there is a certain saving scheme whereby one
can lay in either in cash EUR 1,850.--. And at the end of a period of 7
years one is entitled to EUR 3,200.--. The interest is 8.14%. That is right
because 1850*(1.0814^7) is about EUR 3,200.--
But instead of EUR 1,850 one can also pay monthly EUR 32,-- for a period of
7 years (so 7*12 = 84 payments of EUR 32 each) and after the period the
capital has been completely paid and one is entitled to the end value of EUR
3,200.-- .
The EUR 32.-- monthly payment is an annuity loan. So that means that in each
EUR 32.-- there is a part redemption and a part of interest.
Now with the RATE function I was wondering if I could figure out at which
interest percentage the annuity is being charged. But if I susbsitute the
variables in the syntax for the following values:
=RATE(84,32,1850,3200,1,(0.0814/12))
then it returns #NUM!
Can anybody tell me exactly how I should use this formula?
Regards,
Charles.
