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# rate - Interest Rate per Compounding Period RATE The...

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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

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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 .
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