Excel RATE Function:
We will illustrate the definition, fundamental syntax, and usage of the Excel RATE Function in Office 365. Get an official version of Microsoft Excel from the following link: https://www.microsoft.com/en-in/microsoft-365/excel.
RATE Function – Definition:
- The Excel RATE function returns the interest rate evaluated by iteration. It computes the interest rate per period of an annuity and can have zero or more solutions.
Fundamental Syntax of RATE Function:
The fundamental syntax of RATE Function is,
=RATE(nper, pmt, pv, [fv], [type], [guess])
Argument Description:
- Nper (Required) – It is the total number of payment periods (months, quarters, years, etc.) in an annuity.
- Pmt (Required) – It is the payment made every period.
- Pv (Required) – The present value of all future payments.
- Fv (Optional) – The future value after last payment. It is also referred to as the desired cash balance and its default value is 0.
- Type (Optional) – It needs to be indicated when payments are due. It can be a number either 0 or 1.
| Set type equal to | If payments are due |
| 0 or omitted | At the end of the period |
| 1 | At the beginning of the period |
- Guess (Optional) – It is the number between 0 and 1. When this argument is omitted, it assumes to be 10%.
Important Note:
- #NUM! Error – It appears if the function fails to converge to a solution. This occurs if you failed to use the cash flow convention of negative numbers to indicate outgoing cash flows and positive numbers to represent incoming cash flows.
- #VALUE! Error – The function returns the #VALUE! Error if any one of the supplied values is a non-numeric character.
Examples of RATE Function:
Let’s look at some practical examples of RATE Function and explore how to use it in Microsoft Excel.
*Example 1: *
- Here, in this example, we have selected the input cells C5, D5 & E5 to calculate the interest rate.
- Refer to the below syntax of the RATE function to return the output.
=RATE(C5\*12,D5,E5)
- You need to click Enter to execute the formula.
- Now, you can see the result in the G5 cell.
- Then, you can repeat the same for other input values.
- In another way, you can just drag the cell G5 to G7 so it automatically returns the respective output.
*Example 2: *
- The #NUM! Error appears if the function fails to converge to a solution. This occurs if you failed to use the cash flow convention of negative numbers to indicate outgoing cash flows and positive numbers to represent incoming cash flows.
*Example 3: *
- The function returns the #VALUE! Error if any one of the supplied values is a non-numeric character.
A Brief Summary:
We hope that the above post helped you to know how to use EXCEL RATE Function in Office 365. The examples let you understand the function even more clearer. Don’t forget to share your queries/doubts in the below comment section. Thanks for visiting Geek Excel!! Keep Learning With Us!!
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