## Excel RATE Function

### Description

The RATE returns the interest rate per period of an annuity. The Rate function is used to calculate the periodic interest rate, then multiple as required to get the annual interest rate. The Rate function is calculated by iteration and can have zero or more solutions.

### Syntax and arguments

Formula syntax

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

Arguments

• Nper: Required, the total number of payment periods in the annuity. For example, for a 10-year loan with monthly payments, the total number of payments periods would be 12*10.
• Pmt: Required, the fixed payment per period, and cannot be changed during the life of the annuity. Generally, pmt includes the interest and principal, but excludes taxes. Pmt must be a negative number. If pmt is omitted, the argument fv must be provided.
• Pv: Required, the present value of the investments or loan.
• Fv: Optional, the future value at the end of all payment periods. If it is omitted, the function assumes it as 0.
• Type: Optional, two types that indicate when the payments are due.
•  Type Due 0 (zero) or omitted At the end of the period 1 At the beginning of the period
• Guess: Optional. Your guess on the rate. If guess is omitted, it is assumed to be 10 percent. If RATE does not converge, try other values for guess. Usually, the RATE converges when guess is between 0 and 1.

Return Value

The RATE function returns a decimal value.

Errors

#VALUE! error value occurs when any arguments are non-numeric values.

#NUM! error value occurs when pmt >= 0.

#NUM! error value occurs when the result of RATE does not converge to within 0.0000001 after 20 iterations.

Remarks

Make sure the argument guess and nper are in the same unit. For instance, a 10-year loan with an annual interest rate of 12% with monthly payments. Use 12%/12 for guess, 12*10 for nper.

Version

Excel 2003 or later

### Usage and Examples

Example1: get rate per payment period

In range B3:C8 that lists the details of a load, to calculate its rate per payment period, please use the formula:

=RATE(C4*12,C3,C5)

Press Enter key to get the result.

Example2: get rate per year

In range B3:C8 that lists the details of a load, to calculate its rate per year, please use the formula:

=RATE(C4*12,C3,C5)*12

Press Enter key to get the result.

#### Relative Functions:

• Excel PRICEMAT Function
The PRICEMAT function returns the price per \$100 face value of a security that pays interests at maturity.

• Excel PV Function
The PV function returns the present value of a loan or an investment based on a constant interest rate.

• Excel ACCRINTM Function
The ACCRINTM function returns the accrued interest for a security that pays interest at maturity.

• Excel AMORDEGRC Function
The AMORDEGRC function returns the linear depreciation of an asset for each accounting period by applying a depreciation coefficient based on the lifetime of the assets.

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