This preview shows pages 1–3. Sign up to view the full content.
Interest Rate per Compounding Period
– RATE
The interest rate per compounding period can be calculated using Excel's RATE
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
=RATE(number of periods, payment,present value,future value,type,guess)
Number of periods – term of investment
Payment – periodic payments when amounts are the same
Present Value – value of investment today
Future Value – value of investment at end of term (0 if omitted)
Type – when payment is made; 0 = end of period; 1 = beginning of period
Guess – your guess as to what the rate would be. Assumes 10% if omitted.
General Example
The following general example shows how the RATE function can be used. Notice that
the RATE function appears in the formula bar.
1
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document Using the RATE Function in a Spreadsheet
To calculate the interest rate per compounding period, create a spreadsheet by following
Steps 1 to 7. Or, to use the RATE function right away, open the RATE 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
RATE Function
. You will replace
RATE Function
with
something your project title when you use your spreadsheet for a particular
question or situation.
Step 2
: In cell A3 enter
Total Number of Compounding Periods
.
In cell A4 enter
Payment or Deposit per Compounding Period
.
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
.
Step 3
: Leave cells B3 to B7 empty. You will place values in these cells later.
Step 4
This is the end of the preview. Sign up
to
access the rest of the document.
This note was uploaded on 08/22/2009 for the course MATH 1101 taught by Professor Tonycirusolo during the Fall '05 term at Niagara College.
 Fall '05
 TonyCirusolo
 Math

Click to edit the document details