This article describes the formula syntax and usage of the RATE function in Microsoft Excel.

Description

Returns the interest rate per period of an annuity. RATE is calculated by iteration and can have zero or more solutions. If the successive results of RATE do not converge to within 0.0000001 after 20 iterations, RATE returns the #NUM! error value.

Syntax

RATE(nper, pmt, pv, [fv], [type], [guess])

Note: For a complete description of the arguments nper, pmt, pv, fv, and type, see PV.

The RATE function syntax has the following arguments:

Set type equal toIf payments are due
0 or omittedAt the end of the period
1At the beginning of the period

Remarks

Make sure that you are consistent about the units you use for specifying guess and nper. If you make monthly payments on a four-year loan at 12 percent annual interest, use 12%/12 for guess and 4*12 for nper. If you make annual payments on the same loan, use 12% for guess and 4 for nper.

Example

Copy the example data in the following table, and paste it in cell A1 of a new Excel worksheet. For formulas to show results, select them, press F2, and then press Enter. If you need to, you can adjust the column widths to see all the data.

DataDescription
4Years of the loan
-200Monthly payment
8000Amount of the loan
FormulaDescriptionResult
=RATE(A2*12, A3, A4)Monthly rate of the loan with the terms entered as arguments in A2:A4.1%
=RATE(A2*12, A3, A4)*12Annual rate of the loan with the same terms.9.24%

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