Difference between revisions of "Documentation/How Tos/Calc: PMT function"
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=== Example: === | === Example: === | ||
| − | <tt>'''PMT(5.5%/12; 12*2; 5000; 0; | + | <tt>'''PMT(5.5%/12; 12*2; 5000; 0; 0)'''</tt> |
| − | : returns <tt>'''- | + | : returns <tt>'''-220.48'''</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 220.48 currency units each month; it is given as negative because you pay it. |
<tt>'''PMT(5%/12; 12*2; 0; 1000; 1)'''</tt> | <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%. | + | : returns <tt>'''-39.54'''</tt> in currency units. You wish to save 1000 currency units over 2 years, making monthly payments, beginning today. You assume the rate will remain the same at 5%. Interest is compounded monthly. If you save 39.54 currency units each month, the value at the end of 2 years will be 1000 currency units. |
=== See also: === | === See also: === | ||
Revision as of 05:31, 11 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; 0)
- returns -220.48 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 220.48 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, beginning today. You assume the rate will remain the same at 5%. Interest is compounded monthly. If you save 39.54 currency units each month, the value at the end of 2 years will be 1000 currency units.
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.
