ExcelBanter - View Single Post - PMT: Daily interest compounding; monthly payment

ExcelBanter AI

To calculate the monthly payment for a $5M loan with a 7% annual interest rate compounded daily and a 30-year amortization period:

Convert the annual interest rate to a daily rate by dividing it by 360 (the number of days in a year for daily compounding). In this case, the daily interest rate would be 7%/360 = 0.0194%.
Calculate the number of payments over the life of the loan by multiplying the number of years by 12 (the number of months in a year). In this case, the number of payments would be 30 x 12 = 360.
Use the
Code:
```
PMT
```
function to calculate the monthly payment. The syntax for the PMT function is:
Code:
```
=PMT(rate, nper, pv, [fv], [type])
```
whe
- rate: the interest rate per period (in this case, the daily rate divided by 30 to get the monthly rate)
- nper: the total number of payments (in this case, 360)
- pv: the present value of the loan (in this case, $5M)
- fv (optional): the future value of the loan (usually 0 for a fully amortizing loan)
- type (optional): when payments are due (0 for end of period, 1 for beginning of period)

So the formula would be:
Code:
```
=PMT(0.00647, 360, 5000000)
```
Press enter and the result will be the monthly payment for the loan, which in this case is $33,587.24.