Rate Equation or Interest Rate Equation)
Rate (Interest Rate)
Returns the interest rate per period of an annuity.
Example
PV * (1 + rate ) ^ nper + pmt (1 + rate * type) * ( ( 1 + rate ) ^ nper - 1 ) / rate ) + fv = 0
FV = Future Value
PV = Present Value
Rate = Interest Rate per period
Nper = Number of periods
type = Payment At (Beginning = 1 , End = 0)
pmt = Payment Value
Example
Present Value = 20,000 Bath, Future Value = 50,000 Bath, Payment Value = 1,000 Bath Number of periods = 5 Years
Solution
-20,000 * ( 1 + rate ) ^ 5 + -1000 * ( 1 + rate * 0 ) * ( ( ( 1 + rate ) ^ 5 - 1) / rate ) + 50,000 = 0
rate = 0.16567 , 16.57 %
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