Returns the periodic interest rate required for an investment at a present value to reach a future value within a given period of time.
Syntax:
RATE(future_value:Number, present_value:Number, term:Number)
where:
future_value | is the desired future value; |
present_value | is the present value. The values must be expressed in equivalent terms, e.g. in the same currency; |
term | is the period of the investment. |
Formula:
RATE = ( (future_value ÷ present_value) 1/term ) − 1
Example:
What would be the monthly rate of interest required to turn £50,000 into £1,000,000 in 25 years time?
The formula
RATE(1000000, 50000, 25*12)
returns the number 0.01
, which is the rate per month, which in turn equals 12% per annum.