PV & Rate

The Present Value function, or the PV function, can be considered to be a variation of the payment function.  However, with this function, you are figuring the amount of money you will need to borrow.

With this function, you will specify the interest rate, the amount of time over which you will be repaying the loan, and the maximum amount of money you can repay each month.  The number you are than figuring is the maximum amount of money you can borrow with the above-specified restrictions.  To figure this number, use the following:

=pv(cell address of the interest rate/12,cell address of the loan length, cell address of the monthly payment)

When you hit Enter, the number you will see is the maximum amount of money you can borrow with the given parameters.

The Rate function is used to define an interest rate give the other parameters we have discussed in connection with the other functions in this section.  Although we don’t always have a great deal to say about the interest rate we can receive, this function allows you to figure the rate you would need under certain circumstances.  To figure the rate, use the following:

=rate(cell address of the length of the loan, -cell address of the monthly payment, cell address of the amount of number we want to borrow)*12

When you hit Enter, the interest rate you would need to make a certain payment on your loan will appear.