Excel RATE Function

This post will guide you how to use Excel RATE function with syntax and examples in Microsoft excel.

Description

The Excel RATE function returns the interest rate per payment period of an annuity.

The RATE function is a build-in function in Microsoft Excel and it is categorized as a Financial Function.

The RATE function is available in Excel 2016, Excel 2013, Excel 2010, Excel 2007, Excel 2011 for Mac.

Syntax

The syntax of the RATE function is as below:

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

Where the RATE function arguments are:

  • nPer -This is a required argument. The total number of payments periods in an annuity.
  • Pmt – This is a required argument. The amount of the payment made each period.
  • Pv – This is a required argument. The present value of the payments.
  • Fv – This is an optional argument. The future value or a cash balance you want to attain after the last payment is made. If fv is omitted, it is assumed to be 0 (zero), that is, the future value of a loan is 0.
  • Type – This is an optional argument. The number 0 (zero) or 1 and indicates when payments are due.
Set type equal to If payments are due
0 or omitted At the end of the period
1 At the beginning of the period
  • Guess – This is an optional argument. An initial guess at the internal rate of return. if it is omitted, and it will be set as 0.1 or 10%.

Note:

  • Make sure that you are consistent about the units you use for specifying rate and nper. If you make monthly payments on a four-year loan at an annual interest rate of 12 percent, use 12%/12 for rate and 4*12 for nper. If you make annual payments on the same loan, use 12 percent for rate and 4 for nper.

Excel RATE Function Examples

The below examples will show you how to use Excel RATE Function to calculate the interest rate per period of an annuity.

#1 to get the monthly rate of the loan, using the following formula:

=RATE(B1*12,B2,B3)

Excel Rate examples1


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