Can someone explain to me the PMT formula in excel?
=-PMT (
1) rate
2) nper
3) pv
4) [FV]
5) [Type] )
The above is the rough idea of what the pmt formula is. But am unsure about the ballooning payment and how to go about using this formula in excel.
Use the optional fv (future value) argument to record the balloon payment.
Loan = $200,000
Interest = 4.5%
Balloon = 120,000 after 10 years
Payments made monthly
=PMT(.045/12,10*12,-200000,120000)
Results in a payment of $1,279.11. After 120 payments, the loan balance will be $120,000. Note that the pv and fv argument signs must be opposite.
If your balloon payment isn't set but the term is
Loan = $200,000
Interest = 4.5%
Balloon = balance at 10 years
Monthly payment based on 30 year amortization
=PMT(.045/12,30*12,-200000)
=FV(0.045/12,10*12,1013.37,-200000)
The PMT function returns $1,013.37. This would be your payment to get the loan balance to zero after 30 years (360 payments). The FV function returns $160,178.96. This is the loan balance after 120 payments (10 years) of $1,013.37.
Related
Can you help me to get the manual calc for get the result of the function PAGO from excel using the value of future value, for example this method
=PMT(0.0158,12,-300000,0.6*300000) return 13,900.50 if I remove the future value the function is =PMT(0.0158,12,-300000,0) and the result is 27,641.20
in this second example the function for get this value is ((Ir * (1 + Ir)^Np ) * M ) / ((1+ Ir)^Np -1)
where Ir = interes rate, Np number of payments and M the financing amount.
but Im not sure how I can add the additional value (future value) in this function.
The function is for calculating loan repayment installments. PV if Present amount of the loan outstanding. FV is the loan amount that will be outstanding after the NPER(number of installments) payments.
So, can there be different amounts outstanding FVs for the same loan at the same time?
If you are planning to calculate loan installments in blocks of periods. Say 12 months, 18 months and hence, there will be different FVs at different times. But in that case you should have a new cell for calculation. Where FV of previous block will become PV for calculation block.
More the PV more will be the result amount
More the FV less will be the result amount
Please see if image below helps.
Link
I'm trying to calculate the remaining balance of a home loan at any point in time for multiple home loans.
Its looks like it is not possible to find the home loan balance w/ out creating one of those long tables (example). Finding the future balance for multiple home loans would require setting up a table for ea. home (in this case, 25).
With a table, when you want to look at the balance after a certain amount of payments have been made for the home loan, you would just visually scan the table for that period...
But is there any single formula which shows the remaining loan balance by just changing the "time" variable? (# of years/mths in the future)...
An example of the information I'm trying to find is "what would be the remaining balance on a home loan with the following criteria after 10 years":
original loan amt: $100K
term: 30-yr
rate: 5%
mthly pmts: $536.82
pmts per yr: 12
I'd hate to have to create 25 different amortization schedules - a lot of copy-paste-dragging...
Thanks in advance!
You're looking for =FV(), or "future value).
The function needs 5 inputs, as follows:
=FV(rate, nper, pmt, pv, type)
Where:
rate = interest rate for the period of interest. In this case, you are making payments and compounding interest monthly, so your interest rate would be 0.05/12 = 0.00417
nper = the number of periods elapsed. This is your 'time' variable, in this case, number of months elapsed.
pmt = the payment in each period. in your case $536.82.
pv = the 'present value', in this case the principle of the loan at the start, or -100,000. Note that for a debt example, you can use a negative value here.
type = Whether payments are made at the beginning (1) or end (0) of the period.
In your example, to calculate the principle after 10 years, you could use:
=FV(0.05/12,10*12,536.82,-100000,0)
Which produces:
=81,342.32
For a loan this size, you would have $81,342.32 left to pay off after 10 years.
I don't like to post answer when there already exist a brilliant answer, but I want to give some views. Understanding why the formula works and why you should use FV as P.J correctly states!
They use PV in the example and you can always double-check Present Value (PV) vs Future Value (FV), why?
Because they are linked to each other.
FV is the compounded value of PV.
PV is the discounted value at interest rate of FV.
Which can be illustrated in this graph, source link:
In the example below, where I replicated the way the example calculate PV (Column E the example from excel-easy, Loan Amortization Schedule) and in Column F we use Excel's build in function PV. You want to know the other way... therefore FV Column J.
Since they are linked they need to give the same Cash Flows over time (bit more tricky if the period/interest rate is not constant over time)!!
And they indeed do:
Payment number is the number of periods you want to look at (10 year * 12 payments per year = 120, yellow cells).
PV function is composed by:
rate: discount rate per period
nper: total amount of periods left. (total periods - current period), (12*30-120)
pmt: the fixed amount paid every month
FV: is the value of the loan in the future at end after 360 periods (after 30 year * 12 payments per year). A future value of a loan at the end is always 0.
Type: when payments occur in the year, usually calculated at the end.
PV: 0.05/12, (12*30)-120, 536.82 ,0 , 0 = 81 342.06
=
FV: 0.05/12, 120, 536.82 , 100 000.00 , 0 = -81 342.06
I am trying to solve an iterative problem in Excel. I want to be able to calculate the sum of rent for x years. The rent is increasing at a rate of 10 percent every year. I quickly came up with this python code on a REPL for clarity:
year = 6
rent = 192000
total_rent = rent
for x in range(1 , year):
rent= rent + .1*rent
total_rent = total_rent + rent
print(total_rent) # 1481397.12 is what it prints
This is a trivial problem in programming but I am not sure the best way to achieve this in excel.
In excel I am doing it this something like this:
But all the intermediate rent amount(s) are not really needed. I guess there should be a for loop here as well too, but is there a mathematical representation of this problem which I can use to create the expected result?
If you have a financial problem, you might try the financial functions of excel.
=-FV(0.1, 6, 192000)
or
=FV(0.1, 6, -192000)
the detail: FV on Office Support
Description
FV, one of the financial functions, calculates the future value of an investment based on a constant interest rate. You can use FV with either periodic, constant payments, or a single lump sum payment.
Syntax
FV(rate, nper, pmt, [pv], [type])
For a more complete description of the arguments in FV and for more information on annuity functions, see PV.
The FV function syntax has the following arguments:
Rate Required
The interest rate per period.
Nper Required
The total number of payment periods in an annuity.
Pmt Required
The payment made each period; it cannot change over the life of the annuity. Typically, pmt contains principal and interest but no other fees or taxes. If pmt is omitted, you must include the pv argument.
Pv Optional
The present value, or the lump-sum amount that a series of future payments is worth right now. If pv is omitted, it is assumed to be 0 (zero), and you must include the pmt argument.
Type Optional
The number 0 or 1 and indicates when payments are due. If type is omitted, it is assumed to be 0.
Your problem is a geometric series where the initial term is a = 192000 and the common ratio is r = 1.1. (The ratio is not just the 10% added, it includes the 100% that is added to.) To refresh your Algebra II memory, a geometric series is
total = a + a*r + a*r**2 + ... + a*r**(n-1)
The closed-form formula for the sum of the geometric series is
total = a * (r**n - 1) / (r - 1)
(using Python syntax), or, using something closer to Excel syntax,
total = a * (r^n - 1) / (r - 1)
where n is the number of years. Just substitute your values for a, r, and n.
As the question is about excel it is possible by
Or by using the FV function.
FV returns the future value of an investment based on regular payments and a constant interest rate.
Attributes of the FV function;:
Rate: The interest rate per period.
Nper: The total number of payment periods in an annuity.
Pmt: The payment made each period; it cannot change over the life of the annuity. Typically, pmt contains principal and interest but no other fees or taxes. If pmt is omitted, you must include the pv argument.
Pv: The present value, or the lump-sum amount that a series of future payments is worth right now. If pv is omitted, it is assumed to be 0 (zero), and you must include the pmt argument.
Type: The number 0 or 1 and indicates when payments are due. If type is omitted, it is assumed to be 0.
Yet another way is computing it as a geometric series with the non-financial function SERIESSUM:
=SERIESSUM(1.1,0,1,192000*{1,1,1,1,1,1})
The rate multiplier is 1.1, starting from 1.1^0 == 1 and increasing by 1 each year. The result is 1*a + 1.1*b + 1.1^2*c.... The array 192000*{1,1,...} provides the coefficients a, b, c, ... : one array value for the initial total_rent = rent, and one for each subsequent year 1..5 (from range(1,year)).
Closed. This question is off-topic. It is not currently accepting answers.
Want to improve this question? Update the question so it's on-topic for Stack Overflow.
Closed 10 years ago.
Improve this question
I have a basic app which uses "Simple Interest" to calculate the cost of Finance.
COF = Prt = Principal * (Rate / 12) * nPer
So for a $10,000 loan over 48 months # 10%pa the COF is $4000
Payments are therefore fixed at the rate of:
(Principal + COF) / nPer = Monthly Payment Amount
What I would like to do is generate an Amortization Table which uses Normal Amortization, to produce the period, the amount of Interest included in the payment, the amount of principal included in the payment and the balance of the loan remaining.
Period Interest Principal Balance
I have been unable to find the calculations anywhere for determining the percentage of interest and principal that is included in each periods payment.
I cannot use the Excel formulas (ipmt and ppmt), because these are based on a Compounding Interest Formula not the Simple Interest formula I am trying to use. eg, Excel calculates the COF for a $10000 loan over 48 months # 10%pa as $2174.04
Thanks.
Given the fact that you know in advance the total principal and the total interest you will pay, the payment is simply:
P = (Principal + Interest) / 48 = (10000 + 4000) / 48 = 291.666666
Now, just write an amortization schedule:
Period | Principal (K) | Interest (I) | Payment | Balance (B)
-------------------------------------------------------------------------
1 | K[1] = 10000 | K[1] * 0.1 / 12 | P | K[1] + I[1] - P
2 | K[2] = B[1] | K[2] * 0.1 / 12 | P | K[2] + I[2] - P
...
This can be solved very easily with VBA or Excel formulas.
A bit of info
As far as I know (or as it is known here in Mexico), this metod is called global interest: Calculate the interest you want to collect and then divide the principal and receivable interest by the number of amortization periods.
Excel (and every other spreadsheet program I know), uses the leveled payment method considering a compound interest rate. The results obtained by Excel can be replicated with the following formula:
P = -K / a(n,r)
where P is the leveled payment per period, n is the number of amortization periods, r is the efective interest rate per period, and a(n,r) is the present value of an annuity:
a(n,r) = (1 + (1 + r)^(-n)) / r
I sugest you read "The theory of interest" (Kellison).
I am trying to replicate excel's cumipmt formula (cumulative interest paid on a loan between start period and end period) in coldfusion.
Excel's version takes rate, nper [total number of payment periods], present value, start, end and type [equals 0].
Does anybody have the equation?
I don't think it is just a single equation or formula with which you can find cumulative interest paid between two periods. This is what you have to do
a) Find the monthly payment keeping in view whether the payment is made at the end or at the beginning of period [PMT]
b) Find the total interest paid by the end period
1. Find the outstanding principal by the end period [OP_E]
2. Find the total principal paid by the end period [TP_E] = PV - [OP_E]
3. Find the total amount paid by the end period [TA_E] = PMT x end
4. Find the total interest paid by the end period [TI_E] = [TA_E] - [TP_E]
c) Find the total interest paid by the start period minus 1
1. Find the outstanding principal by the start period [OP_S-1]
2. Find the total principal paid by the start period [TP_S-1] = PV - [OP_S-1]
3. Find the total amount paid by the start period [TA_S-1] = PMT x start - 1
4. Find the total interest paid by the start period [TI_S-1] = [TA_S-1] - [TP_S-1]
d) Now find the CUMIPMT = [TI_E] - [TI_S-1]
This CUMIPMT Calculator uses the above or similar algorithm to calculate the cumulative interest paid on a loan