How to use RATE function? in Excel General Questions    |   |  Help   Search For:     In:   Office   Excel     Excel General Questions     Excel New users     Excel Application Errors     Excel Charts     Excel Programming     Excel Setup     Excel Worksheet Functions              Eric 8/12/2006 6:12 PM PST   Question   Could anyone give me any suggestion on how to use RATE function? F=A*((1+r)^n-1)/r r = interest rate n = number of installment for a fixed investment plan A = fixed amount for each installment F = Final capital value For example, an insurance saving plan offers $20,000 return in the next 20 years by paying $600 every year. How to determine the interest rate? ((1+r)^n-1)/r = $20,000 / $600 = 33.333, when n is 20, then r will equal to approximate 5%. 0% < r, r is a real number for the interest rate, which could be 10% or 300% n is a positive integer for any number of term. There is a RATE function in excel, could anyone give me any suggestion on how to determine the interest rate based on the above example please? RATE(nper,pmt,pv,fv,type,guess) RATE(20,600,20000,fv,type,guess) What are the value fv, type, guess for this example? Thank you in advance Eric     Was this post helpful to you?         Reply |   Top           Niek Otten 8/13/2006 2:11 AM PST   Answer   Hi Eric, =RATE(20,600,0,-20000) Gives you 5.0762% -- Kind regards, Niek Otten Microsoft MVP - Excel "Eric" <Eric@discussions.microsoft.com> wrote in message news:289BB046-D63C-40DC-8435-AAF87DAE7B2E@microsoft.com... | Could anyone give me any suggestion on how to use RATE function? | | F=A*((1+r)^n-1)/r | | r = interest rate | n = number of installment for a fixed investment plan | A = fixed amount for each installment | F = Final capital value | | For example, an insurance saving plan offers $20,000 return in the | next 20 years by paying $600 every year. How to determine the interest | rate? | ((1+r)^n-1)/r = $20,000 / $600 = 33.333, when n is 20, then r will | equal to approximate 5%. | | 0% < r, r is a real number for the interest rate, which could be 10% | or 300% | n is a positive integer for any number of term. | | There is a RATE function in excel, could anyone give me any suggestion on | how to determine the interest rate based on the above example please? | | RATE(nper,pmt,pv,fv,type,guess) | RATE(20,600,20000,fv,type,guess) | | What are the value fv, type, guess for this example? | | Thank you in advance | Eric     Was this post helpful to you?         Reply |   Top           Eric 8/13/2006 6:35 AM PST   Thank you very much Eric     Was this post helpful to you?         Reply |   Top           Eric 8/13/2006 7:53 AM PST   I get mortage loan $63000, and I need to pay $2276 every 3 months for 15 years. Does anyone know on how to determine the interest rate using RATE function? =RATE(60,2276,0,-63000) = -3%, which don't seem right Does anyone know how to apply RATE function in this case? Could anyone please give me any suggestion? Thank for any suggestion Eric     Was this post helpful to you?         Reply |   Top           Niek Otten 8/13/2006 8:07 AM PST   Hi Eric, =RATE(60,2276,-63000) -- Kind regards, Niek Otten Microsoft MVP - Excel "Eric" <Eric@discussions.microsoft.com> wrote in message news:2EDA92D5-1733-477A-AA5D-061E1270ADAF@microsoft.com... |I get mortage loan $63000, and I need to pay $2276 every 3 months for 15 years. | Does anyone know on how to determine the interest rate using RATE function? | | =RATE(60,2276,0,-63000) = -3%, which don't seem right | | Does anyone know how to apply RATE function in this case? | Could anyone please give me any suggestion? | Thank for any suggestion | Eric |     Was this post helpful to you?         Reply |   Top           Eric 8/13/2006 8:29 AM PST   Thank you very much Eric     Was this post helpful to you?         Reply |   Top         Return to Microsoft Communities   Notify me of replies