Do not understand pmt and goal seek function

[tina2011]

<?xml:namespace prefix = o ns = "urn:schemas-microsoft-comfficeffice" /><o> Please help!<o> </o>
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What IF ANALYSIS tools. How use the goal seek to determine on interest rate. I don't understand is the value that you input in the BY CHANGING CELL the same as the value the loan amount?
and 2nd question: What value to you use in with the follow dialog box that are use in PMT function? What do you place in the fields? <o></o>
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I do not understand this formula: PMT(interest rate (unknown)/12 (what is 12),Term-months, Loan Amount?<o></o>
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I do not know what to place in the fields for this function argument on PMT?

Thanks Nota<o></o>
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[brettdj]

Nota,

(1) You can probably use the RATE equation for this. More details on your example would help

(2) The first variable is the interest rate. If working in months then the annual rate is divided by 12. The second variable is the number of payment periods, the 3rd is the present value of a loan

So to pay off $100 in even monthly payments at a 5% interest rate over two years
PMT = (5%/12,24,100)
= $4.39 at the end of each month ($105.29 in total)

Cheers

Dave

 

[Yahya]

hi

Excel Workbook
	A	B	C
1	Loan	35000
2	Interest	7.50%
3	nPer	5	Years
4
5
6	PMT	701.33
Sheet1

Excel 2007

Cell Formulas
Range	Formula
B6	=PMT(B2/12,B3*12,-B1)

in this example the loan amount is 35000
and annual rate 7.5% in PMT formula we need to calculate the Monthly payment, so we will Divide by 12 month
and the number of period 5 Years and as we said Monthly Payment we will Multiply it with 12

because that we use *12 and /12
============
and in the same example
to use Goal seek
if we want to change the value of PMT to become 650 $ NOT 701.33
to do that the changing Argument is the rate
in Goal seek in Set Cell B6 " must contain formula "
To Value 650 " this the value which we are looking for "
By Changing Cell B2 " rate, this cell which contain the rate "
============
after press ok
the value of cell b2 will change to 4.34%


HTH

 

[brettdj]

Goal Seek is an unneccessary complication in that example

=RATE(5*12,-650,35000)*12
=4.34%
solves it immediately

Cheers

Dave

 

[Yahya]

Goal Seek is an unneccessary complication in that example

=RATE(5*12,-650,35000)*12
=4.34%
solves it immediately

Cheers

Dave

Yes Dave
but tina asked about it

don't understand is the value that you input in the BY CHANGING CELL the same as the value the loan amount?

 

[brettdj]

Yes Dave
but tina asked about it

Fair enough. Although likely because Tina wasn't aware there was an immediate method

Anyhow Tina if there is anything further you need, please post sample data

Cheers

Dave