PMT function: Description, Usage, Syntax, Examples and Explanation

Syntax of PMT function

PMT(rate, nper, pv, [fv], [type])

The PMT function syntax has the following arguments:

• Rate: The interest rate for the loan.
• Nper: The total number of payments for the loan.
• Pv: The present value, or the total amount that a series of future payments is worth now; also known as the principal.
• Fv (Optional): The future value, or a cash balance you want to attain after the last payment is made. If fv is omitted, it is assumed to be 0 (zero), that is, the future value of a loan is 0.
• Type (Optional): The number 0 (zero) or 1 and indicates when payments are due.

PMT formula explanation

• The payment returned by PMT includes principal and interest but no taxes, reserve payments, or fees sometimes associated with loans.
• Make sure that you are consistent about the units you use for specifying rate and nper. If you make monthly payments on a four-year loan at an annual interest rate of 12 percent, use 12%/12 for rate and 4*12 for nper. If you make annual payments on the same loan, use 12 percent for rate and 4 for nper.

Tip    To find the total amount paid over the duration of the loan, multiply the returned PMT value by nper.

Example of PMT function

Steps to follow:

1. Open a new Excel worksheet.

2. Copy data in the following table below and paste it in cell A1

Note: For formulas to show results, select them, press F2 key on your keyboard and then press Enter.

You can adjust the column widths to see all the data, if need be.

For more information about annuity functions, visit:

• How to calculate Net Present Value (NPV)
• PMT, RATE, NPER, PV and FV Calculations
• Calculate payment periods for loan
• Calculate interest rate for loan
• Calculate periods for annuity