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PMT Function

The PMT function calculates the payment amount for a loan based on the interest rate, number of payment periods, present value or principal, future value, and whether payments are due at the beginning or end of each period. It returns the amount needed to be paid per period to pay off the loan on schedule. The payment includes principal and interest but not additional fees. Users must ensure rate and number of periods inputs are consistent with the frequency of payments.

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Nathaniel Whyte
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18 views2 pages

PMT Function

The PMT function calculates the payment amount for a loan based on the interest rate, number of payment periods, present value or principal, future value, and whether payments are due at the beginning or end of each period. It returns the amount needed to be paid per period to pay off the loan on schedule. The payment includes principal and interest but not additional fees. Users must ensure rate and number of periods inputs are consistent with the frequency of payments.

Uploaded by

Nathaniel Whyte
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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PMT function

PMT is a financial function that calculates the payment for a loan based on
constant payments and a constant interest rate.

Syntax

=PMT(rate, nper, pv, [fv], [type])

The PMT function syntax has the following arguments:

● Rate Required. The interest rate for the loan.


● Nper Required. The total number of payments for the loan.
● Pv Required. The present value, or the total amount that a series of
future payments is worth now; also known as the principal.
● Fv Optional. 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 Optional. 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.

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