PMT Formula in MS Excel

 PMT Formula in MS Excel

The PMT formula in MS Excel is used to calculate the periodic payment for a loan based on constant payments and a constant interest rate. 

The formula is as follows:

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

Where:

• rate: The interest rate per period.
• nper: The total number of payment periods.
• pv: The present value (the total amount that a series of future payments is worth now).
• [fv]: Optional. The future value (the balance you want to have left after the final payment).
• [type]: Optional. The type of the payment: 0 or omitted for the end of the period, 1 for the beginning of the period.

For example, if you have a loan with an interest rate of 5%, a total of 12 payments, and a present value of $10,000, the formula to calculate the monthly payment would be:

=PMT(5%/12,12,-10000)

This would return a monthly payment of -854.05. The negative sign indicates that the payment is an outflow.