RATE Function Explained
The RATE function in Microsoft Excel calculates the interest rate per period of an annuity. It takes the following arguments: nper (number of periods), pmt (payment per period), pv (present value), fv (future value), type (when payments are due), and guess (estimated rate). It returns the interest rate per period for an annuity.
RATE Function Syntax
RATE(nper, pmt, pv, [fv], [type], [guess])
- nper: The total number of payment periods in an annuity.
- pmt: The payment made each period and cannot change over the life of the annuity.
- pv: The present value, or the total amount that a series of future payments is worth now.
- fv: The future value, or a cash balance you want to attain after the last payment is made. If fv is omitted, it is assumed to be 0 (the future value of a loan, for example, is 0).
- type: A logical value representing the timing of payments. If type is omitted, it is assumed to be 0.
- guess: Your guess for what the rate will be. If you omit guess, it is assumed to be 10 percent.