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Excel PMT Function

As one of the financial functions, the PMT function calculates the total payment (principal + interest) per period for a loan based on a constant loan amount, interest rate, and the number of periods.

pmt function 1


Syntax

=PMT (rate, nper, pv, [fv], [type])


Arguments

  • Rate (required): The interest rate for the loan.
  • Nper (required): The total number of payments for the loan.
  • Pv (required): The present value. It is also known as the principal of a loan
  • Fv (optional): The future value or a cash balance you want to attain after the last payment. If omitted, it will default to 0 (zero).
  • Type (optional): It specifies when payments are due.

    pmt function 3


Return value

The PMT function returns the periodic payment required to pay off a loan.


Function notes

  1. The payment returned by the PMT function is only principal plus interest, excluding any taxes, reserve payments, or associated fees.
  2. Make sure that the units used to specify the rate and nper are consistent. If you make monthly payments on an eight-year loan at an annual interest rate of 5 percent, provide 5%/12 as the rate argument and 8*12 as the nper argument. 5%/12 represents the monthly interest rate and 8*12 means the total number of loan periods in months.
  3. To know the total amount of payments over the duration of the loan, multiply the returned PMT value by nper.

Examples

In the example shown below, suppose you borrowed $10,000 with an annual interest rate of 5% and an 8-year duration. How much you should pay for the loan per year or per month? Please do as follows.

pmt function 4

For an annual payment for the loan, copy the formula below into cell F4 and press the Enter key to get the result.

=PMT (C4, C5, C6)

pmt function 5

For a monthly payment for the loan, copy the formula below into cell F5 and press the Enter key to get the result.

=PMT (C4/12, C5*12, C6)

pmt function 6

Notes:

  1. In the above formulas, the fv and type arguments are omitted, meaning that the future value of the loan is 0, and the payments are due at the end of each period.
    For example, you can add the two arguments in the monthly formula above if you want:

    =PMT (C4/12, C5*12, C6, 0, 0)

  2. To make the units that specify the rate and nper consistent, the rate and nper arguments become C4/12 and C5*12 respectively in the monthly payment formula.
  3. The results returned by the PMT function are negative numbers, displayed in red with parentheses.
  4. We can directly input the values of the arguments in the formula.
    • The formula to return an annual payment for the loan becomes:

      =PMT (5%, 8, 10000)

    • The formula to return a monthly payment for the loan becomes:

      =PMT (5%/12, 8*12, 10000)

Relative Functions:

  • Excel CUMIPMT Function
    The CUMIPMT function returns the cumulative interest paid on a load between the start period and end period.

  • Excel CUMPRINC Function
    The CUMPRINC function returns the cumulative principal paid on a load between the start period and end period.


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