Creating Formulas Using the PMT Function

To use the PMT Functions:

1. Click the Insert Function button.
2. Click PMT in the list of functions.
3. Click OK.
4. In the Rate box, enter the interest rate per period. If you use an annual interest rate, be sure to add /12 to calculate a monthly rate.
5. In the Nper box, enter the total number of payments for the loan.
6. In the Pv box, enter the present value — the total amount due on the loan as of the current date.
7. In the Fv box, enter the future value — the value of the loan at the end of the payments—0, if you are paying off the loan completely.
8. In the Type box, enter a 1 if you are making payments at the beginning of each period or a 0 if you are making payments at the end of each period.
9. Click OK to insert the function.

To calculate a loan payback using the PMT function, click the Insert Function button. Next, select PMT from the list of functions and click OK. In the arguments dialog box, enter the values for the rate, number of payments, present value, and future value. In the Type box, enter a 1 to indicate payments will be made at the beginning of each period. At the bottom of the dialog box you will see the result of your function. Click OK to insert the function into your worksheet.