Hello,



I am getting bad results from the PMT function and don't know waht is wrong. The example in the HELP area returns a -$888.89. Why?

-$888.89=PMT(8,10,1000,0,1)

Hi,

I assume you should be using an interest rate of 8% per annum not 8 (which would be 800%)?
8% per annum interest rate, 10 payments, start amount 1000, final amount 0, paying at the start of each period.

Result, each payment is = -£137.99

__________________
Colin

RAD Excel Blog

Thanks for the information, Colin.

When I did it with the % sign in the formula, I didn't expect a negative value to be returned.

Thank you for your aid.

Bill

don't you have to divide the 8% by the number of payments per year (for example 12 for monthly payments, or maybe it would be 10 for this short loan) to convert it from annual rate (APR) to rate per period?

=PMT(8%/12,10,1000,0,1)

If you dont like the result being a neg number, you can convert the PV to a negative number...

=PMT(8%/12,10,-1000,0,1)

Hi Bill,No problem, Bill. Slightly confused because someone else asked the question? Are you the same user as OneOleGuy registered under two usernames?!

You're absolutely right, Kimberly, you do. The example I gave in post #2 is the annual repayment on a ten year loan. I didn't see anything on the original post which suggested monthly payments being required so my interpretation was that the key mistake was that the OP was using 800% per annum rather than 8% per annum.

But now I look in the Excel helpfile, I see that example 1 does indeed demonstrate a 10-monthly payment loan at 8% and that is probably what the OP was referring to, albeit the principal in the helpfile is 10,000 as opposed to 1,000. Thanks for pointing that out.

__________________
Colin

RAD Excel Blog