Excel RATE Function: Sometimes, we want to find out the interest rate in the spreadsheet for huge data. At that time, we can use the Excel RATE function. With the help of this built-in function, we can achieve the task as quickly as possible. We all know that Excel is a spreadsheet program that helps to perform mathematical operations.
We will illustrate the definition, fundamental syntax, and usage of the Excel RATE Function. Get an official version of Microsoft Excel from the following link:
https://www.microsoft.com/en-in/microsoft-365/excel
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Definition of RATE Function
- It is one of the built-in functions in Microsoft Excel.
- The Excel RATE function returns the interest rate evaluated by iteration.
- It computes the interest rate per period of an annuity and can have zero or more solutions.
Syntax
- Here, you will see the syntax of the RATE function.
- To apply this function on your spreadsheet, you have to select a cell and enter the formula in the following format.
- Once you enter the formula, just click on the Enter button to get the result.
=RATE(nper, pmt, pv, [fv], [type], [guess])
Argument Description:
- Nper (Required) – The total number of payment periods (months, quarters, years, etc.) in an annuity.
- Pmt (Required) – It is the payment made every period.
- Pv (Required) – The present value of all future payments.
- Fv (Optional) – The future value after the last payment. It is also referred to as the desired cash balance, and its default value is 0.
- Type (Optional) – It needs to be indicated when payments are due. It can be a number of either 0 or 1.
| Set type equal to | If payments are due |
|---|---|
| 0 or omitted | At the end of the period |
| 1 | At the beginning of the period |
- Guess (Optional) – It is the number between 0 and 1. When this argument is omitted, it assumes to be 10%.
Note:
1) #NUM! Error – It appears if the function fails to converge to a solution. This error occurs if you could not use the cash flow convention of negative numbers to indicate outgoing cash flows and positive numbers to represent incoming cash flows.
2) #VALUE! Error – The function returns the #VALUE! Error if any one of the supplied values is a non-numeric character.
Examples
Let’s look at some practical examples of the RATE Function and explore using it in Microsoft Excel.
- Initially, you have to open your Excel workbook on your PC and launch a worksheet that has data.
- For example, we have given the input values in Columns B, C, and D. And we will get the interest rate using the RATE function.
- Then, you have to enter the formula in the cell as shown below to get the result.
- After entering the formula, you need to click the Enter button to get the output, as shown below. You can drag down the cell to fill the remaining cells.
Input that Causes Error
- The #NUM! Error appears if the function fails to converge to a solution. This error occurs if you fail to use the cash flow convention of negative numbers to indicate outgoing cash flows and positive numbers to represent incoming cash flows.
- The function returns the #VALUE! Error if any one of the supplied values is a non-numeric character.
A Brief Summary
We hope that the above post helped you know how to use EXCEL RATE Function in the worksheet. The examples let you understand the function even clearer.
Don’t forget to share your feedback in the below comment section. To learn more about Excel functions, then visit our webpage Aawexcel.com.
Video Tutorial
Use the following video to know how to apply the Excel RATE function in the worksheet.
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