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With the xlookup function it finds the last payment in the amortization schedule. When you change the last input (Interest Accrual) a new payment is calculated to amortize the loan to zero at maturity, The last input is a dropdown with three options (30/360, Actual/365, and Actual/360). Once the input data above is entered in the spreadsheet, an amortization schedule is produced. To overcome this problem, I have incorporated Excel’s Goal Seek into the calculation. Therefore, when using the PMT function, the last payment will be larger than the rest, or an extra payment may be needed. The problem is not only do months not have the same number of days, but that February has an extra day every four years.
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Simple interest loans are good example of loans that require actual days in each month. It is more difficult however to calculate a monthly payment that will pay off a loan with the same payment each month if the loan uses the actual days in each month to calculate interest (Actual/365 or Actual 360). In that case you can use the Excel PMT function. On the Home tab, in the Number group, click Percentage.Ĭlick Increase Decimal or Decrease Decimal to set the number of decimal places.Calculating the monthly payment on loans with dates can be tricky, unless the loan assumes all months have 30 days and there are 12 months in a year (30/360). Remember the cell you enter here must be referenced by the formula you specify in the Set cell box.įinally, format the target cell (B3) to display the result as a percentage.
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In the By changing cell box, enter B3, the reference to the cell that contains the value that you want to adjust. This is the result you want the formula to return. The number is negative because it's a payment. In the To value box, type your payment amount, -900. In the Set cell box, enter B4, the cell with the formula you want to resolve. On the Data tab, in the Data Tools group (Excel 2013) or the Forecast group (Excel 2016), click What-If Analysis, and then click Goal Seek. Use Goal Seek to determine the interest rate And for more information about the PMT function, see PMT function. The formula divides the value in B3 by 12 because you specified a monthly payment, and the PMT function assumes an annual interest rate.īecause cell B3 doesn't have a value, Excel assumes a 0% interest rate, and it returns a payment of €555.56. The formula also refers to cell B3, which is where you'll have Goal Seek put the interest rate. The formula refers to the values you entered in cells B1 and B2. You don't enter that amount here, because you want to use Goal Seek to determine the interest rate, and Goal Seek requires that you start with a formula. In this example, you want to pay $900 each month. The formula calculates the payment amount. This is the number of months that you want to pay off the loan. This is the amount that you want to borrow. Prepare the worksheetĪdd these labels in the first column to make it easier to read the worksheet. In this example, the monthly payment amount is the goal you seek. Because you want to calculate the interest rate needed to meet your goal, you use the PMT function because it calculates a monthly payment amount. You want to take 180 months to pay off the loan, and you can afford payments of €900 per month. Let's look at the preceding example, step-by-step. For more information about the Solver add-in, see Define and solve a problem by using Solver. If you want to work with more than one input value, such as a loan amount and a monthly payment, you use the Solver add-in. Note: Goal Seek works only with one variable input value. You can use Goal Seek to determine the interest rate you'll need to meet your loan goal. You know how much money you want to borrow, how long you need to pay off the loan, and how much you can afford to pay each month. If you know the result you want from a formula, but you aren't sure which input value the formula needs to get that result, use the Goal Seek feature.įor example, suppose you need to borrow money.