Calculating Payments

All you have to do is watch this

PowerPoint. You may need to refer to
it later, so keep it open when you are
finished.

=PMT(rate,nper,pv,fv,type)
What you see above is the formula for
calculating payment.
Each item in parenthesis is an item you have to
fill in
This looks very complicated, but when you
break it down, its really pretty easy!

=PMT(rate,nper,pv,fv,type)
Rate is the % you pay on the loan
Nper is how many payments you will make (use
months)
Pv is how much you are financing
Fv is how much you will owe when you finish
the last payment usually $0
Type is always going to be 1 meaning you
make the payment on the 1st of the month.

=PMT(rate,nper,pv,fv,type)
The interest rate is shown as 6%, but remember
that you dont pay it all at once you only pay
1/12th of it at a time, so when you put it in the
formula, you do it like this:
.06/12 that means 6 percent divided by 12

=PMT(rate,nper,pv,fv,type)
How much you owe
at the end of the
loan?

=PMT(.06/12,36,30000,0,1)
Payment made
on the 1st of the
month
6% interest

36 months

Youre paying
$30000