Rate Function

Description

Returns the interest rate per period for an annuity.

Syntax

Rate(nper, pmt, pv, fv, due, guess)

Remarks

An annuity is a series of constant cash payments made over a period of time.  An annuity can be a loan (such as a home mortgage) or an investment (such as a monthly savings plan).

The Rate function uses the following numeric arguments:

Argument     Description

nper               Total number of payment periods in the annuity.  For example, if you make monthly payments on a four-year car loan, your loan has a total of 4 * 12 (or 48) payment periods.

pmt                Payment to be made each period.  Payments usually contain principal and interest that doesn't change over the life of the annuity.

pv                  Present value, or value today, of a series of future payments or receipts.  For example, when you borrow money to buy a car, the loan amount is the present value to the lender of the monthly car payments you will make.

fv                  Future value or cash balance you want after you've made the final payment.  The future value of a loan, for instance, is \$0.  As another example, if you will need \$50,000 in 18 years to pay for your child's education, then \$50,000 is the future value.

due                Number indicating when payments are due. Use 0 if payments are due at the end of the payment period, and use 1 if payments are due at the beginning of the period.

guess            Value you guess will be returned by Rate.  In most cases, guess is 0.1 (10 percent).

For all arguments, cash paid out (such as deposits to savings) is represented by negative numbers; cash received (such as dividend checks) is represented by positive numbers.

Rate is calculated by iteration.  Starting with the value of guess, Rate cycles through the calculation until the result is accurate to within 0.00001 percent.  If, after 20 tries, it can't find a result, Rate fails.  If your guess is 10 percent and Rate fails, try a different value for guess.

Distribution Note   When you create and distribute applications that use any of the financial functions, you should install the file MSAFINX.DLL in the customer's Microsoft Windows \SYSTEM directory.  The Visual Basic Setup Kit provides tools to help you write setup programs that install your applications.