How To Calculate Interest Rate Per Month In Excel
Calculate interest charge per unit for loan
Generic formula
= RATE (periods, -payment,amount) * 12
Summary
To summate the periodic involvement rate for a loan, given the loan amount, the number of payment periods, and the payment amount, you can use the Charge per unit function. In the case shown, the formula in C10 is:
Explanation
Loans have four primary components: the amount, the interest charge per unit, the number of periodic payments (the loan term) and a payment amount per menstruum. 1 use of the Rate function is to calculate the periodic interest rate when the corporeality, number of payment periods, and payment amount are known.
In this example, we want to calculate the almanac interest rate for 5-twelvemonth, $5000 loan, and with monthly payments of $93.22. The RATE function is used like this:
The function arguments are configured as follows:
nper - The number of periods is 60 (v * 12), and comes from cell C7.
pmt - The payment is $93.22, and comes from jail cell C6. Notation pmt is input as a negative value. In annuity functions, cash paid out is represented by a negative number. Notation: If pmt is not provided, the optional fv argument must exist supplied.
pv - The nowadays value is $5000, and comes from C5.
With these inputs, the RATE function returns 0.375%, which is the periodic interest rate. To become an annual involvement charge per unit, we multiply past 12:
= Charge per unit (C7,C6, -C5) * 12 = 0.003751 * 12 = 0.0450
With the percent number format practical to prison cell C10, the result is displayed every bit 4.50%.
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Source: https://exceljet.net/formula/calculate-interest-rate-for-loan
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