How to Use the PMT Function in Excel

Understanding the PMT Function in Excel and Google Sheets

The PMT function is a financial tool in Excel and Google Sheets that calculates the payment amount for a loan based on constant payments and a constant interest rate. This function is invaluable for determining regular payment amounts necessary to fully repay a loan over a designated period with a set interest rate.

Basic Syntax

The basic syntax for the PMT function is:

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

rate: The interest rate per period.
nper: The total number of payment periods in the term of the loan.
pv: The present value or principal amount of the loan.
fv (optional): The future value, or a cash balance you aim to achieve after the final payment has been made. Default is 0 if omitted.
type (optional): Specifies when payments are due. Use 0 for payments at the end of the period and 1 for payments at the start of the period. Default is 0 if omitted.

Using the PMT Function

Consider a scenario where you borrow $10,000 at an annual interest rate of 5%, to be repaid over 5 years.

Loan Amount (PV)	Interest Rate	Loan Term (Years)	Monthly Payment
$10,000	5%	5	=PMT(5%/12, 5*12, 10000)

In this example, the monthly payment is calculated using the formula: =PMT(5%/12, 5*12, 10000).

This formula computes the monthly payment required to repay the loan within the specified timeframe at the stated interest rate.

Additional Notes

– Make sure the rate and nper match in terms of their time units (e.g., both monthly or annually).

– The PMT function typically returns a negative value, reflecting an outgoing payment.

– Adjust the interest rate and number of periods accordingly if your payment frequency changes (e.g., from monthly to quarterly).

By mastering the PMT function in Excel and Google Sheets, you can seamlessly calculate the payments needed to manage and fully repay loans, empowering you to make well-informed financial choices.

More information: https://support.microsoft.com/en-us/office/pmt-function-0214da64-9a63-4996-bc20-214433fa6441

Other functions

ACCRINT

Returns the accrued interest for a security that pays periodic interest

ACCRINTM

Returns the accrued interest for a security that pays interest at maturity

AMORDEGRC

Returns the depreciation for each accounting period by using a depreciation coefficient

AMORLINC

Returns the depreciation for each accounting period

COUPDAYBS

Returns the number of days from the beginning of the coupon period to the settlement date

COUPDAYS

Returns the number of days in the coupon period that contains the settlement date

COUPDAYSNC

Returns the number of days from the settlement date to the next coupon date

COUPNCD

Returns the next coupon date after the settlement date

COUPNUM

Returns the number of coupons payable between the settlement date and maturity date

COUPPCD

Returns the previous coupon date before the settlement date

CUMIPMT

Returns the cumulative interest paid between two periods

CUMPRINC

Returns the cumulative principal paid on a loan between two periods

Returns the depreciation of an asset for a specified period by using the fixed-declining balance method

DDB

Returns the depreciation of an asset for a specified period by using the double-declining balance method or some other method that you specify

DISC

Returns the discount rate for a security

DOLLARDE

Converts a dollar price, expressed as a fraction, into a dollar price, expressed as a decimal number

DOLLARFR

Converts a dollar price, expressed as a decimal number, into a dollar price, expressed as a fraction

DURATION

Returns the annual duration of a security with periodic interest payments

EFFECT

Returns the effective annual interest rate

Returns the future value of an investment

FVSCHEDULE

Returns the future value of an initial principal after applying a series of compound interest rates

INTRATE

Returns the interest rate for a fully invested security

IPMT

Returns the interest payment for an investment for a given period

IRR

Returns the internal rate of return for a series of cash flows

ISPMT

Calculates the interest paid during a specific period of an investment

MDURATION

Returns the Macauley modified duration for a security with an assumed par value of $100

MIRR

Returns the internal rate of return where positive and negative cash flows are financed at different rates

NOMINAL

Returns the annual nominal interest rate

NPER

Returns the number of periods for an investment

NPV

Returns the net present value of an investment based on a series of periodic cash flows and a discount rate

ODDFPRICE

Returns the price per $100 face value of a security with an odd first period

ODDFYIELD

Returns the yield of a security with an odd first period

ODDLPRICE

Returns the price per $100 face value of a security with an odd last period

ODDLYIELD

Returns the yield of a security with an odd last period

PDURATION

Returns the number of periods required by an investment to reach a specified value

PPMT

Returns the payment on the principal for an investment for a given period

PRICE

Returns the price per $100 face value of a security that pays periodic interest

PRICEDISC

Returns the price per $100 face value of a discounted security

PRICEMAT

Returns the price per $100 face value of a security that pays interest at maturity

Returns the present value of an investment

RATE

Returns the interest rate per period of an annuity

RECEIVED

Returns the amount received at maturity for a fully invested security

RRI

Returns an equivalent interest rate for the growth of an investment

SLN

Returns the straight-line depreciation of an asset for one period

SYD

Returns the sum-of-years' digits depreciation of an asset for a specified period

TBILLEQ

Returns the bond-equivalent yield for a Treasury bill

TBILLPRICE

Returns the price per $100 face value for a Treasury bill

TBILLYIELD

Returns the yield for a Treasury bill

VDB

Returns the depreciation of an asset for a specified or partial period by using a declining balance method

XIRR

Returns the internal rate of return for a schedule of cash flows that is not necessarily periodic

XNPV

Returns the net present value for a schedule of cash flows that is not necessarily periodic

YIELD

Returns the yield on a security that pays periodic interest

YIELDDISC

Returns the annual yield for a discounted security; for example, a Treasury bill

YIELDMAT

Returns the annual yield of a security that pays interest at maturity