Topic 2 - Spreadsheets

Study Unit 4 / 5: Exam – PMT

EXPLAIN THE PMT FUNCTION IN EXCEL

=PMT(rate,Nper,Pv,Fv,Type)

=PMT(rate, nper, pv, [fv=0][type=0])

CALCULATES THE PAYMENTS REQUIRED EACH PERIOD ON A LOAN OR INVESTMENT

THE PMT FUNCTION TAKES THREE REQUIRED ARGUMENTS.

1 - rate = interest rate per period of the loan (per month - divided by 12)
2 - Nper = number of repayment periods (the years – multiplied by 12)
3 - Pv = the principal loan amount – enter the amount of the loan

Fv = future value - the balance you want at the end - leave out = 0

Type = optional - when payments are due

0/omitted = end of period,

1 = start of period

 

HINT:

FORMULAS - PMT, PV, FV

THE RULES OF THUMB ARE AS FOLLOWS:

IF IT'S MONEY THAT'S LEAVING YOUR HANDS, WHETHER IT'S A DEPOSIT TO AN ACCOUNT OR A PAYMENT FOR A LOAN, THEN THE NUMBER SHOULD BE NEGATIVE

IF IT'S MONEY THAT'S COMING TO YOU, WHETHER YOU'RE RECEIVING A LOAN OR AN INVESTMENT THAT'S MATURED, THEN THE NUMBER SHOULD BE POSITIVE

UNISA OFTEN ASKS FOR THE ANSWER TO RETURN A POSITIVE VALUE. YOU ACHIEVE THIS BY INSERTING A MINUS SIGN IN THE FRONT OF THE FUNCTION NAME OR IN FRONT OF THE PMT OR FV OR PV ARGUMENT DEPENDING ON THE FUNCTION BEING USED.

 

EXAMPLE:

YOU WANT TO BUY A CAR FOR R50 000.

THE BANK CAN FINANCE YOUR CAR PURCHASE AT CONSTANT INTEREST RATE OF 14% PER ANNUM OVER 5 YEARS.

Study Unit 4 / 5: Exam – RIGHT (Prev Lesson)
(Next Lesson) Study Unit 4 / 5: Exam – FV
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