Returns the interest rate per period of an annuity. RATE is calculated by iteration and can have zero or more solutions. If the successive results of RATE do not converge to within 0.0000001 after 20 iterations, RATE returns the #NUM! error value.
Syntax
RATE(nper,pmt,pv,fv,type,guess)
For a complete description of the arguments nper, pmt, pv, fv, and type, see PV.
Nper is the total number of payment periods in an annuity.
Pmt is the payment made each period and cannot change over the life of the annuity. Typically, pmt includes principal and interest but no other fees or taxes. If pmt is omitted, you must include the fv argument.
Pv is the present value
Fv is 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 (the future value of a loan, for example, is 0).
Type is the number 0 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 |
Guess is your guess for what the rate will be.
Remark
Make sure that you are consistent about the units you use for specifying guess and nper. If you make monthly payments on a four-year loan at 12 percent annual interest, use 12%/12 for guess and 4*12 for nper. If you make annual payments on the same loan, use 12% for guess and 4 for nper.
Example
The example may be easier to understand if you copy it to a blank spreadsheet.
Selecting an example from Help
Data | Description |
---|---|
4 | Years of the loan |
-200 | Monthly payment |
8000 | Amount of the loan |
Formula | Description (Result) |
=RATE(A2*12, A3, A4) | Monthly rate of the loan with the above terms (1%) |
=RATE(A2*12, A3, A4)*12 | Annual rate of the loan with the above terms (0.09241767 or 9.24%) |
Note The years of the loan is multiplied by 12 to get the number of months.