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Formula Question

Posted by Rob on September 21, 2001 2:05 PM

Does anyone know how to get a Payment Factor given a Rate and Term (in months)?

Term: 36 months
Rate: 10.50%
Payment Factor: .0325024

I'm sure there is a math formula to get it, i just dont know it :) I would like to know how to do it manually, not in excel...although that would be nice too :)

any help is appreciated...thanks

Posted by Juan Pablo on September 22, 2001 11:08 AM

Rob, the payment factor is a constant that is applied to the current value of a loan (Or anything...) to calculate the amount of periodic payments in a given time, therefor, if you think of your current value as 1, then if you use the PMT function, you can calculate the Payment factor. I don't remember the formula, but maybe Excel's help has it.

If you have in A1 the current Value (1), A2 is Rate (10.50%) and A3 is period (36 months) then A4, your answer would be :

=PMT( A2/12, A3, -A1) which calculates to:
$0.03 --> 0.03250244

Juan Pablo