Exceljet

Quick, clean, and to the point

Annuity solve for interest rate

Excel formula: Annuity solve for interest rate
Generic formula 
=RATE(nper,pmt,pv,fv)
Explanation 

To solve for an annuity interest rate, you can use the RATE function. In the example shown C9 contains this formula:

=RATE(C7,-C6,C4,C5)

Explanation

An annuity is a series of equal cash flows, spaced equally in time. The goal in this example is to have $100,000 at the end of 10 years, with an annual payment of $7,500 made at the end of each year. What interest rate is required?

To solve for the interest rate, the RATE function is configured like this:

nper - from cell C7, 10.
pmt - from cell C6, 7500 (negative sign)
pv - from cell C4, 0.
fv - from cell C5, 100000

With this information, the RATE function returns 0.0624. Note payment is negative because it represents a cash outflow.

Author 
Dave Bruns

Excel Formula Training

Formulas are the key to getting things done in Excel. In this accelerated training, you'll learn how to use formulas to manipulate text, work with dates and times, lookup values with VLOOKUP and INDEX & MATCH, count and sum with criteria, dynamically rank values, and create dynamic ranges. You'll also learn how to troubleshoot, trace errors, and fix problems. Instant access. See details here.