PMT function
Rate
The interest rate per period.
NumberOfPeriods
The total number of payment periods in the term.
PresentValue
The initial sum borrowed.
FutureValue
The cash balance to be attained at the end of the term. (With a loan, this would normally be 0.) If omitted, it is assumed to be 0.
Type
0 if payments are made at the end of each period and 1 if payments are made at the start of each period (including a payment at the start of the term). If omitted, it is assumed to be 0.
Returns
The payment per period.
Returns the payment per period for a fixed-rate loan.
Examples
Returns roughly $-220.48. Let's assume that you take out a two-year loan of $5,000 at a yearly interest rate of 5.5%, making monthly payments at the end of the month. You pay $220.48 each month — the returned number is negative because you pay the sum.
Returns roughly $-39.54. Let's assume that you wish to save $1,000 over two years, making monthly payments, beginning today. Further, you assume that the rate will remain fixed at 5%. Interest is compounded monthly. If you save $39.54 each month, the value at the end of two years will be $1,000.
Returns roughly $-259.99. Let's assume that you take out a two-year loan of $5,000 at a yearly interest rate of 5.5%, making monthly payments at the end of the month. Further, you wish to build up a lump sum of $1,000, to be paid to you at the end of the term. Interest is compounded monthly. This is a hypothetical example, which makes the unlikely assumption that the interest you are charged when in debt is the same as the interest that you get when in credit (when building up your $1,000 lump sum). It illustrates the necessary sign of each parameter: 5000 is positive, because you are paid the loan sum, 1000 is positive, because you are paid the lump sum, and the result, $-259.99, is negative, because you pay the monthly sum.