The excel pmt function is a financial function that calculates the payment for a loan based on a constant interest rate the number of periods and the loan amount. The pmt function can be used to figure out the future payments for a loan assuming constant payments and a constant interest rate.

Excel Pmt Function Time Value Of Money

In the previous example we calculated the monthly payment by providing the loan amount interest rate and a number of payments.

How to use the pmt function in excel. For example if you are borrowing 10 000 on a 24 month loan with an annual interest rate of 8 percent pmt can tell you what your monthly payments be and how much principal and interest you are paying each month. Also known as the principal. Enter the required values in the pmt function.

In an automatic loan calculator we are using annual rate time and frequency of payments. Pmt stands for payment hence the function s name. The pmt function syntax has the following arguments.

Open microsoft excel worksheet. Of payments that are constant or fixed. There are many situations where we want to know the monthly installments of the loan or investments with all the required data given.

Next click on financial tab and choose pmt in the drop down menu. Pmt function in excel helps us to give the periodic payment of a loan. Excel will open the pmt function arguments box see image below.

The interest rate for the loan. Pmt function in excel can be used as an automatic loan calculator. The function arguments dialog box that opens allows you to specify the rate nper and pv arguments.

For example if you are applying for a two year car loan with an annual interest rate. The present value or the total amount that a series of future payments is worth now. Click on formulas tab in the top menu bar of excel worksheet.

The future value or a cash balance you want to attain after the last payment is made. If we know the total amount of loan interest rate and the no. In cell b7 click the insert function button on the formula bar select financial from the or select a category drop down list and then double click the pmt function in the select a function list box.

The total number of payments for the loan.