Loan PMT Excel Formula Equal Installments
Every bank loan is a serious cash flow problem which must be integrated into the company’s financial planning. Microsoft comes to the rescue with the PMT excel formula which show exactly how much should be paid at any given time if we want equal installments. Just be sure to check at the option you have for Preferred Checking accounts.
How PMT excel formula works
As PMT is a cash out formula, the result of it is a negative number which shows that cash goes out of the company’s bank accounts.
The syntax of this formula is:
=-PMT(rate, nper, pv)
- Rate The annual interest rate for the loan.
- Nper Total number of payments for the loan (months).
- Pv The amount of the loan received today
Before signing a mortgage loan contract we all must simulate the amounts that we need to repay every month based on the contract conditions. Nobody should accept to sign a loan contract before doing the financial analysis job to understand the full consequences of the contract he is about to enter into.
I had to take a few such decisions and I wanted to have a tool that help me understand better the risks and the strategies I have to pursue in order to minimize the cost of the loan.
Loan Simulator Mortgage Calculator
The excel file I offer anyone is interested in such impact analysis is very complex and can simulate the modification of reference interest rate every month and also the potential benefits of advance payments.
Here is an excel file containing an example for you to download.