The PMT Function and 10 Different Formulas

PMT is a function in Microsoft Excel that calculate loan's payment that is based on stable payments and interest rate.

Parameters and Arguments:

The PMT has a syntax that looks like this: PMT(RATE;NPER;PV;[fv];[tupe]).

Rate: This is required part of the function, and defined as the loan's interest rate

Nper: This is required, and defined as the total numbers of payment associated with the loan.

PV: It is standard, and the Present value. In other word, total amount that different future payments currently worth.

FV: This is optional. Future value. In other word, the cash balance that the user desire to attain after the last payment is made.

Type: This is optional, and can be either 0 or 1. It is an indication of when the payments would be due.

Example 1: Simple PMT Formula

We are evaluating a loan assessment, and want to know the payment, which is why we are using the PMT formula to find the answer.

Example 2: Complete PMT Formula

The client wants to acknowledge the payment, and what it would worth in the future. This in combine will allow the acknowledgement of the whole payment, with future value included.

Example 3: PMT Formula

The formula has been layout, and things are more complex. This is why we are using the formula to find the answer.

Example 4: Specific Amount Plus PMT Formula

The client has already layout a specific amount of money, which would be added, to acknowledge the whole payment. This is why we will be using the PMT formula for answers.

Example 5: PMT minus Percentage

The situation here is going to be crazy, because we do not know how it would work. We are considering increasing the percentage of the earnings. This also makes it necessary to find out the best way that work for the company. But, we already know the PMT, but want to know the increased amount of money.

Example 6: Average and PMT

The business is working very well, and we would like to acknowledge adding the average of the revenues to know how the performance work. This is why we will be using the AVERAGE to find how we will perform in the payment, and use it in combination to the PMT.

Example 7: Golden Client: SUM and PMT

It is our company's Christmas gift, and we are just enjoying the Christmas gift. The company was given the opportunity to receive the company that is establishing different revenues, and this is why we are adding the all revenue, which they would like to pay back for 25 years. Now, we are using both SUM and PMT function to find out how much the opportunities would provide for 25 years to come.

Example 8: PMT & AND function

Our business is going well, and we would like to find out how the information would turn out how the business will go, and PMT & AND are being simultaneously used.

Example 9: PMT and SUM

The problem is quite different, because we do not know what to work, and the situation is now very different, and we need to use both the PMT and SUM for the successfulness, which would allow this to work out effectively.

Example 10: IF and PMT

A situation has come to light, and we need to acknowledge what it means to the firm. A client has informed us that if the loan is a specific amount, then he would like to extend the payment period for additional five years. We do not know the best method for dealing with it. But, we'd know that the situation can be resolved. The financial engineer was given the assignment to find the appropriate answer.