EXPLAIN THE PMT FUNCTION IN EXCEL
=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
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.
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.