Annual Rate of Interest for Loans (RATE)
Syntax: RATE(Time; Installment; Investment; Future; Type)
Suppose you want to borrow $1,000,000 and repay it in lump sums of $100,000 over 25 years. What annual interest rate should the lender set? To find out the answer use
=RATE(25; -100000; 1,000,000)
You see that it would be at least 8.78%.
Figure 8-14. Sample result of the RATE function
Do not forget to add a minus sign (–) in front of the payment to indicate the money paid out.
The future argument is used to enter the amount of money remaining after the last payment is made. For loans, you usually enter 0 or don't use this argument at all unless ...
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