Rate function is used calculating interest rate per period for a loan.
Syntax for RATE Function is
PV – Present Value
rate – Interest Rate
Nper – Payment Periods
Pmt – Payment
FV – Future Value
Type – 1 if payment is at the beginning of the period, 0 if payment is at the end of the period
Jane wants to take a loan for a total of 50,000$. Her optimal plan for paying it back is 2,250$ monthly payments for 24 months. In order for Jane’s plan to work, what should be the interest rate of the loan?
Our formulation using rate function for this example is :
In order for Jane’s plan to work, monthly interest rate must be 0.63%.