Calculating Payments All you have to do is watch this PowerPoint. You may need to refer to it later, so keep it open when you are finished.
=PMT(rate,nper,pv,fv,type) • What you see above is the formula for calculating payment. • Each item in parenthesis is an item you have to fill in • This looks very complicated, but when you break it down, it’s really pretty easy!
=PMT(rate,nper,pv,fv,type) • Rate is the % you pay on the loan • Nper is how many payments you will make (use months) • Pv is how much you are financing • Fv is how much you will owe when you finish the last payment – usually $0 • Type is always going to be 1 – meaning you make the payment on the 1st of the month.
=PMT(rate,nper,pv,fv,type) The interest rate is shown as 6%, but remember that you don’t pay it all at once – you only pay 1/12th of it at a time, so when you put it in the formula, you do it like this: .06/12 that means 6 percent divided by 12
=PMT(rate,nper,pv,fv,type) How much you owe at the end of the loan? • =PMT(.06/12,36,30000,0,1) Payment made on the 1st of the month 36 months 6% interest You’re paying $30000