Join Curt Frye for an in-depth discussion in this video RATE: Discovering the interest rate of an annuity, part of Excel 2010: Financial Functions.
When you evaluate any investment opportunity, most of the time the first thing…you want to know is the interest rate.…However, there are some investments that are presented to you without that information.…What they tell you are the number of periods, the payment each period, the…present value, in other words the amount you're borrowing and so on, but they…don't tell you the interest rate.…However, if you want to find that interest rate using Excel, you can do so…using the RATE function.…The RATE function has three required arguments and three optional arguments.…
I've listed them here in this worksheet.…The first required argument is the number of periods and that is simply the…number of payments that you're going to have to make. In this case it's monthly.…So it's a period of five years multiplied by 12 months per year, and then the…payment per period and that is expressed as a negative number because it is an…outflow from your account.…Next is the present value and that's basically the amount that you're borrowing.…
- Analyzing loans, payments, and interest
- Discovering the interest rate of an annuity
- Determining depreciation using the straight line, declining balance, double-declining balance, and other methods
- Calculating the future value of an investment with variable returns
- Finding the discount rate of a security
- Converting between fractional prices and decimal prices
- Determining the yield of securities that pay interest periodically
Skill Level Intermediate
Q: Where can I learn more about Excel formulas?
A: Discover more on this topic by visiting Excel formulas on lynda.com.
Managing and Analyzing Data in Excel 2010with Dennis Taylor1h 32m Appropriate for all
1. Analyzing Loans, Payments, and Interest
2. Calculating Depreciation
3. Determining Values and Rates of Return
4. Calculating Bond Coupon Dates and Security Durations
5. Calculating Security Prices and Yields
6. Calculating Prices and Yields of Securities with Odd Periods
Additional resources1m 5s
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