Excel: Rate Function

In Excel, the Rate function returns the interest rate for an annuity.

The syntax for the Rate function is:

Rate( number_payments, payment, PV, FV, Type, Estimate )

number_payments is the number of payments for the annuity.

payment is the amount of the payment made each period.

PV is the present value.

FV is optional. It is the future value. If this parameter is omitted, the Rate function assumes a FV value of 0.

Type is optional. It indicates when the payments are due. Type can be one of the following values:

Value Explanation

0 Payments are due at the end of the period. (default)

1 Payments are due at the beginning of the period.

If the Type parameter is omitted, the Rate function assumes a Type value of 0.

Estimate is optional. It is your guess at what the rate will be. If this parameter is omitted, the Rate function assumes an Estimate of 10%.

Applies To:

Excel 2007, Excel 2003, Excel XP, Excel 2000

For example:

Let's take a look at a few examples:

This first example returns the interest rate on a $5,000 loan where monthly payments of $250 are made for 2 years. All payments are made at the end of the period.

=Rate(2*12, -250, 5000)

This next example returns the interest rate on a $5,000 loan where monthly payments of $250 are made for 2 years. All payments are made at the beginning of the period.

=Rate(2*12, -250, 5000, , 1)

This next example returns the interest rate on a $8,000 loan where weekly payments of $700 are made for 4 years. All payments are made at the end of the period.

=Rate(4*52, -700, 8000, , 0)

This final example returns the interest rate on a $6,500 loan where annual payments of $1,000 are made for 10 years. All payments are made at the end of the period.

=Rate(10*1, -1000, 6500)

VBA Code

The Rate function can also be used in VBA code. For example:

Dim LValue As Double

LValue = Rate(10*1, -1000, 6500)

In this example, the variable called LValue would now contain the value of 0.087113756.