# RATE function

In this lesson you will learn how to use RATE function in Excel.

Using RATE function you can calculate interest rates of investments or loans

Syntax:

=RATE(nper,pmt,pv,[fv],[guess])

• nper - how many installments would you pay
• pmt - how much you pay every month
• pv - present value
• fv - future value
• guess

## Example 1 Interest rate of loan

The company offers installment sale. Installments are spread over 50 installments, the monthly repayment amount is \$15000. Price is \$1000000. What interest rate offers seller, per month and per year?

Syntax: =RATE(50,-15000,1000000,0,0)

As you see you should type PMT with minus sign. You pay money off so it cause that you spend that money.

Answer: The result is the monthly interest rate: 1.07%. Yearly interest rate is 12*1.07% = 12.90%.

## Example 2 Interest rate for weekly installments

What is interest rate for \$10 000 loan. Weekly \$600 payments are made for 7 years. You have to pay at the beginning of week.

Syntax: =RATE(7*52,-600,10000,,1)

Answer: The result is the weekly interest rate: 6.38%