Difference between revisions of "Documentation/How Tos/Calc: PMT function"
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: <tt>'''numperiods'''</tt>: the total number of payment periods in the term. | : <tt>'''numperiods'''</tt>: the total number of payment periods in the term. | ||
: <tt>'''principal'''</tt>: the initial sum borrowed. | : <tt>'''principal'''</tt>: the initial sum borrowed. | ||
| − | : <tt>'''finalbalance'''</tt>: the | + | : <tt>'''finalbalance'''</tt>: the cash balance you wish to attain at the end of the term (optional - defaults to 0). With a loan, this would normally be 0. |
: <tt>'''type'''</tt>: when payments are made (optional - defaults to 0): | : <tt>'''type'''</tt>: when payments are made (optional - defaults to 0): | ||
:: 0 - at the end of each period. | :: 0 - at the end of each period. | ||
:: 1 - at the start of each period. | :: 1 - at the start of each period. | ||
| + | |||
| + | See the examples for how this function can be used for building up savings with fixed regular payments. | ||
=== Example: === | === Example: === | ||
<tt>'''PMT(5.5%/12; 12*2; 5000; 0; 1)'''</tt> | <tt>'''PMT(5.5%/12; 12*2; 5000; 0; 1)'''</tt> | ||
: returns <tt>'''-219.47'''</tt> in currency units. You take out a 2 year loan of 5000 currency units at a yearly interest rate of 5.5%, making monthly payments at the end of the month. You pay 219.47 currency units each month; it is given as negative because you pay it. | : returns <tt>'''-219.47'''</tt> in currency units. You take out a 2 year loan of 5000 currency units at a yearly interest rate of 5.5%, making monthly payments at the end of the month. You pay 219.47 currency units each month; it is given as negative because you pay it. | ||
| + | |||
| + | <tt>'''PMT(5%/12; 12*2; 0; 1000; 1)'''</tt> | ||
| + | : returns <tt>'''-39.54'''</tt> in currency units. You wish to save 1000 currency units over 2 years, making monthly payments. You assume the rate will remain the same at 5%. You must save 39.54 currency units each month. | ||
=== See also: === | === See also: === | ||
| Line 25: | Line 30: | ||
[[Documentation/How_Tos/Calc: CUMPRINC function|'''CUMPRINC''']], | [[Documentation/How_Tos/Calc: CUMPRINC function|'''CUMPRINC''']], | ||
[[Documentation/How_Tos/Calc: CUMPRINC_ADD function|'''CUMPRINC_ADD''']] | [[Documentation/How_Tos/Calc: CUMPRINC_ADD function|'''CUMPRINC_ADD''']] | ||
| + | |||
| + | '''[[Documentation/How_Tos/Calc: Derivation of Financial Formulas|Derivation of Financial Formulas]]''' | ||
[[Documentation/How_Tos/Calc: Financial functions|'''Financial functions''']] | [[Documentation/How_Tos/Calc: Financial functions|'''Financial functions''']] | ||
Revision as of 17:22, 10 July 2008
PMT
Returns the payment per period for a fixed rate loan.
Syntax:
PMT(rate; numperiods; principal; finalbalance; type)
- rate: the interest rate per period.
- numperiods: the total number of payment periods in the term.
- principal: the initial sum borrowed.
- finalbalance: the cash balance you wish to attain at the end of the term (optional - defaults to 0). With a loan, this would normally be 0.
- type: when payments are made (optional - defaults to 0):
- 0 - at the end of each period.
- 1 - at the start of each period.
See the examples for how this function can be used for building up savings with fixed regular payments.
Example:
PMT(5.5%/12; 12*2; 5000; 0; 1)
- returns -219.47 in currency units. You take out a 2 year loan of 5000 currency units at a yearly interest rate of 5.5%, making monthly payments at the end of the month. You pay 219.47 currency units each month; it is given as negative because you pay it.
PMT(5%/12; 12*2; 0; 1000; 1)
- returns -39.54 in currency units. You wish to save 1000 currency units over 2 years, making monthly payments. You assume the rate will remain the same at 5%. You must save 39.54 currency units each month.
See also:
CUMIPMT, CUMIPMT_ADD, IPMT, PPMT, CUMPRINC, CUMPRINC_ADD
Derivation of Financial Formulas
Issues:
- PMT formats the result as currency if the cell has default formatting. It thus displays a real currency amount. The amount returned by PMT may still be fractional - the display rounds this to the nearest real currency. Note that your loan provider might round in a different way (for example always downwards).
- If type is 1, payments are made at the start of each period, including at the start of the first period - in other words, the first payment is made on the same day the loan is taken out. It is not clear if any loans are actually arranged on this basis.
- With tiny rate values, Calc (in common with another major spreadsheet) may produce an error. This has no impact in a real world calculation.
