PMT: Calculating a loan payment

Most loans, whether between businesses or made by businesses to individual…borrowers, are fully amortized.…Fully amortized means that the monthly payments made over the term of the loan…pay off the principal and all of the accrued interest.…In Excel, you can calculate the monthly payments required to pay off a fully…amortized loan by using the PMT function.…I've set up this workbook so that it has all the arguments that we need for the…PMT function to calculate our monthly payment.…First is the Rate and this is exactly what you would expect, the annual interest rate.…

Next is the Number of periods and that's just the number of payments that you need to make.…In this case, it's 12 payments a year over 30 years for 360 payments.…Then we have the Present value and that is the amount that you owe and you'll…notice that it is represented as a negative number because, as I said, it's the…amount that you are owing.…Next is the Future value of the loan and this is the amount that you want to end…up with after you make your payments.…