I took a loan from the bank in the amount of 200,000 USD. The loan is for 17 years.
I repay the loan through regular payments every month. The monthly interest rate on the loan is 0.4%.
At the end of the loan period, in addition to the last payment, I pay an additional 10,000 USD.
What is the regular monthly payment I will make each month?
Can you explain me please how to use this formula?
As you are paying the last 10k at the end, that is effectively the Future Value of the loan when it terminates. So you can enter that as the fv in the PMT function:
=PMT(0.004,17*12,-200000,10000)
or 1404.25
Note that the signs of the Pv and Fv must be opposite in this case. So
if you want to show your PMT as a negative value, you must use +200000
and -10000.
Related
Hy, I am using a spreadsheet template, to calculate the Franchise Fee and Market Fee on each sale. The idea is that I will pay the franchise fee onetime, either in multiple sales or in a single sale and the total franchise fee should be only $3000, not less or greater when the fee will $3000, I will not bound to pay franchise fee on other sales. This scenario is the same for the market fee, but the market fee which I will pay is $20,000, and if I paid this fee in single or multiple sales, after this, I will not bound to pay this fee. I am trying it to solve it using the formula below but it is not giving me the exact amount. It is exceeding the limit.
=IF(SUM($H$9:H9)>3000,0,G10*$H$6) and =IF(SUM($I$9:I9)>20000,0,G10*$J$6)
The Sheet layout is as under.
So I need the total of each fee should be $3000 and $20,000 for each category respectively. The breakup of the fee will be based on the Fee Rate written in Cell H6 and J6 respectively. I tried nested Ifs but could not find the exact amount. Any suggestion,s, please. Thanks
Here is more concise info.
Limit the last payment to Max - Current Sum
ie.
=IF(SUM($H$9:H9)>=3000, 0, MIN(3000 - SUM($H$9:H9), G10*$H$6))
I had tried to run some example from my calculator on excel. I cannot get the correct answer of 203.13. Can someone try to pinpoint the error in my formula?
You plan to open a savings account and deposit the same amount of money at the beginning of each month. In 10 years, you want to have $25,000 in the account.
How much should you deposit if the annual interest rate is 0.5% with quarterly compounding?
FV 25000
NPER 10
RATE 0.50%
PMT ($193.23)
=PMT(RATE/4, NPER*12,,FV)
You must observe consistency in the periodicity. If you use monthly payments, you must have an NPER in months as well, and a monthly RATE. THe difficulty here is that the quarterly compound with a monthly deposit.
If you calculate everything on a quarterly basis, you will also have dfferences, but I think they will be minor.
To calculate a precise answer you would need to know when you made the first payment relative to the bank's quarterly interest cycle. If your first deposit was immediately before the interest compound date, interest would start accruing immediately. If your first deposit was immediately after the interest compound date, interest would not accrue immediately.
Also the bank may calculate interest based on the ending balance or on the average balance for that quarter.
After a long time, I found the answer. However, I cannot understand the formula. isnt RATE/4 as it is quarterly compounded?
=PMT(RATE/12, NPER*12,,FV,1)
I have this excel formula:
=PMT(B13/12,$C$5,-B12,0,0)
What does this formula do exactly?
As described in the documentation
Calculates the payment for a loan based on constant payments and a
constant interest rate.
Syntax
PMT(rate,nper,pv,fv,type)
For a more complete description of the arguments in PMT, see the PV
function.
Rate is the interest rate for the loan.
Nper is the total number of payments for the loan.
Pv is the present value, or the total amount that a series of
future payments is worth now; also known as the principal.
Fv is the future value, or a cash balance you want to attain after
the last payment is made. If fv is omitted, it is assumed to be 0
(zero), that is, the future value of a loan is 0.
Type is the number 0 (zero) or 1 and indicates when payments are
due.
In context =PMT(B13/12,$C$5,-B12,0,0)
B13 is the annual interest rate (so the monthly rate is B13/12)
C5 is the number of months of payments
-B12 is the present value
0 is the future value
Payments are calculated as if they are due at the end of the month
If you had tried Google or looked at the help that is built into Excel you would have found that it's a function to Calculates the payment for a loan based on constant payments and a constant interest rate. For reference you can look it up here.
From http://office.microsoft.com/en-us/excel-help/pmt-HP005209215.aspx:
Calculates the payment for a loan based on constant payments and a
constant interest rate.
Syntax
PMT(rate,nper,pv,fv,type)
For a more complete description of the arguments in PMT, see the PV
function.
Rate is the interest rate for the loan.
Nper is the total number of payments for the loan.
Pv is the present value, or the total amount that a series of
future payments is worth now; also known as the principal.
Fv is 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 is the number 0 (zero) or 1 and indicates when payments are
due.
Simply put I want to know how to get the functionality on this page: in Microsoft Excel.
I tried with the FV functon but it does not seem to have support to increase the payments every year.
The increase in payments could be specified in percentage points (as in the page linked to) or even by a fixed amount every year (like "increase deposit by 10000 every year).
An illustration:
Year 1:
Monthly Deposit: 5000
No. of deposits in a year: 12
Interest rate: 10%
Interest compounded quarterly
Total deposited during the year: **60000**
Interest earned in first year: **3323**
Year 2:
Amount carried forward from first year: **603323** (principal + Interest)
Monthly Deposit: 5500 (increased by 10% or increased by a fixed value of 500 every year)
No. of deposits in a year: 12
Interest rate: 10%
Interest compounded quarterly
Total deposited during the year: 66000
Interest earned during year: 13552 (large, because we started the year with seed value from previous year)
and so on...
The FV function gives me correct value for year 1, but I could not find a way to extrapolate it to increase investment every year.
I don't know how to do the quartlerly interest, it may be because I using excel 2003. I have a solution for a monthly compound that you should be able to modify. The formular in cells b10 is =FV($B$2/12, $B$3, $B$4+A9*$B$7, -$B9,$B$6) to add extra years put the year number in column A and copy and paste the formular in column B. It takes the previous years result as the pv and adds the value iin B7 to the payment rate for each additional year.
I'm trying to figure out what rate of return I would need on an investment in order to compare to paying down a mortgage.
I have calculated the change in the mortgage - I know how much money I'd save by the end of the loan term and how much money I'd need to put in. I'm trying to compare that to an equivalent investment - treat any lump sum payment as the principal of an investment, treat any monthly overpayment as a monthly contribution to an investment, plug in the final value, and solve for the effective rate of return.
I've looked at the RATE and the IRR commands. IRR seems close to what I want, but it wants a series of values for the input flows, but I have it as a periodic regular investment.
For an example with numbers - if I pay an extra $100 a month on the mortgage for 120 months, I can save $10000 in total cost. What command can I use to calculate this in terms of an investment? If I invest $100 a month for ten years and end up with $10000, what was my annualized rate of return?
If I start with principal PV invested at rate R, I contribute monthly payment M for N months, and I end up with final value FV at the end of those N months, I'd like to solve for R given the other variables.
I know there's another factor regarding the mortgage interesting being tax deductible - I'll look at worrying about that after I figure this part out.
:)
Your monthly return is given by this RATE formula
number of periods = 120 (10*12)
contributions of $100 per period
future value of 10,0000
=RATE(10*12,-100,0,10000)
=-0.32% per month
Note as a check =RATE(10*12,-100,0,12000) = 0
which is equivalent to an annual rate of
=1-(1-0.32%)^12
=-3.73%