Periodic (Annuity) Payments
– PMT
The periodic payment or deposit for an annuity can be calculated using Excel's PMT
function. See the table below for a detailed list of the exercises and problems in the text
that can be solved using this function.
Syntax
PMT(rate,number of periods,present value,future value,type)
Rate – Interest rate
Number of periods – term of investment
Payment – periodic payments where individual amounts are the same
Present Value – value of the investment today
Future Value – value of the investment at end of term (0 if omitted)
Type – when payment is to be made
0 – at end of period (assumed if left blank)
1 – at beginning of period
General Example
The following general example shows how the PMT function can be used. Notice that
the PMT function appears in the formula bar.
1
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Using the PMT Function in a Spreadsheet
To calculate the periodic payment or deposit for an annuity, create a spreadsheet by
following Steps 1 to 7. Or, to use the PMT function right away, open the PMT worksheet
in the Excel Functions Templates workbook. All fields have been formatted for you
(currency, percentage, number of decimals displayed).
Step 1
: In cell A1 enter
PMT Function.
You will replace
PMT Function
with your
project title when you use the spreadsheet for a particular question or situation.
Step 2
:
In cell A3 enter
Interest Rate per Compounding Period
.
In cell A4 enter
Total Number of Compounding Periods
.
In cell A5 enter
Present Value
.
In cell A6 enter
Future Value
.
In cell A7 enter
Type (Ordinary or Due)
.
In cell A8 enter
Answer
.
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 Fall '05
 TonyCirusolo
 Math, Time Value Of Money, 175

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