Returns the periodic interest required for an investment at a present value to reach a future value within a given period of time.
Syntax:
RATE(fv:number, pv:number, term:number)
fv | Future value. |
pv | Present value. The values must be expressed in equivalent terms, e.g. in the same currency. |
term | Period of the investment. |
The following formula is used by the RATE
function:
interest = ( (fv ÷ pv) 1/term ) - 1
Example:
RATE(1000000, 50000, 25*12)
calculates the monthly rate of interest required to turn £50,000 into £1,000,000 in 25 years time, and returns the number 0.01
, which is the rate per month, which in turn equals 12% per annum.