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Excel RATE Function

The Excel RATE function is used to return the interest rate per period of a loan or investment.

The syntax for the RATE function is:

=RATE(nper, pmt, pv, [fv], [type], [guess])

ArgumentPurpose
nperThe number of payments for the loan or investment
pmtThe payment made each period
pvThe present value, or total amount a number of future payments is worth now
fvThe future value, or total remaining after the last payment has been made.This argument is optional, and if omitted the total is assumed to be 0
typeWhen the payments are due. It can be entered as 1 or 0 and is optional. If omitted the value is assumed to be 00 – Payments are made at the end of the period1 – Payments are made at the beginning of the period
guessYour guess at what the rate may be. It is optional and if omitted, the guess is assumed to be 10%

The examples below show the RATE function being used to return the interest rate dependent upon different parameters.

Excel RATE function to return the interest rate per period of a loan
FunctionResult
=RATE(B4*12,-C4,A4)3.49%Interest rate returned on a £5,000 loan paid in £200 monthly payments for 5 years. Payments are made at the end of each period
=RATE(B4*12,-C4,A4,,1)3.67%Interest rate returned on a £5,000 loan paid in £200 monthly payments for 5 years. Payments are made at the beginning of each period
=RATE(B4*52,-C4,A4)4.00%Interest rate returned on a £5,000 loan paid in £200 weekly payments for 5 years. Payments are made at the end of each period

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