RATE function

RATE (NumberOfPeriods, Payment, PresentValue, FutureValue?, Type?, Guess?) RATE (NumberOfPeriods; Payment; PresentValue; FutureValue?; Type?; Guess?)

NumberOfPeriods

Number Number

The total number of payment periods in the term.

Payment

Number Number

The payment made each period. If set to 0, the value of the futureValue parameter is used instead.

PresentValue

Number Number

The lump sum payment at the start of the term.

FutureValue

Number Number (optional)

The cash balance to be attained at the end of the term. If omitted, it is assumed to be 0.

Type

Number Number (optional)

0 If payments are made at the end of each period and 1 if payments are made at the start of each period (including a payment at the start of the term). If omitted, it is assumed to be 0.

Guess

Number Number (optional)

A guess of the interest rate. If omitted, 10% (0.1) is assumed.

Returns

Number Number

The interest rate of an annuity.

Returns the interest rate per period of an annuity. RATE uses an iterative method and may not converge if the guess is too far from the actual rate.

Example

RATE (5, - 600, 0, 3500, 0, 10 % )

RATE (5; - 600; 0; 3500; 0; 10 % )

Returns roughly 7.71%. Suppose you deposit $600 at the end of each year for five years and receive $3,500 at the end of the term. The implied annual interest rate is roughly 7.71%.