PMT Function on Excel
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    Using the PMT function on MS Excel to determine monthly loan payment and monthly savings plan.
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    • Created:
      Feb 21 2008
    • Public:
      Yes
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    • Language:
      English
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      684
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    • 0:00Let's find out the monthly payment for a $300,000 home at 8% over 30 years.
    • 0:03Type in your rate (8%).
    • 0:16Type in the number of years (30).
    • 0:31Type in the amount of your loan (300000).
    • 0:49Use the PMT function by typing "=PMT("
    • 0:54Use cell "A1" (your rate) divided by 12 (the number of months in a year) for the rate portion.
    • 1:00Use cell "B1" (your years) times 12 for the "nper" (number of periods) portion.
    • 1:06Use cell "C1" (your loan) as your PV (present value).
    • 1:09Use 0 as your FV (future value). This means that the eventual worth of the loan will be 0 (you will have paid it off). You may also close the function after the PV step.
    • 1:25To see the payment at 7% for a $350,000 loan, change the rate and loan cells.
    • 1:42See how the change occurs instantaneously?
    • 1:43Now let's see how much we would have to save each month in order to save $1 million in 30 years at a 10% annual savings rate.
    • 1:48Type in your rate (10%).
    • 2:00Type in the number of years (30).
    • 2:15Type in your desired savings ($1 million).
    • 2:30Use the PMT function the same way you did before.
    • 2:52Type in 0 for your PV (you don't have any money right now).
    • 2:54Use cell "C10" for your FV.
    • 3:16To see your required savings at 12% for 20 years, changes the rate and years cells.
    • 3:25There you have it! I hope you have enjoyed my screencast.
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