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Could anyone give me any suggestion on how to use RATE function?
F=A*((1+r)^n-1)/r r = interest rate n = number of installment for a fixed investment plan A = fixed amount for each installment F = Final capital value For example, an insurance saving plan offers $20,000 return in the next 20 years by paying $600 every year. How to determine the interest rate? ((1+r)^n-1)/r = $20,000 / $600 = 33.333, when n is 20, then r will equal to approximate 5%. 0% < r, r is a real number for the interest rate, which could be 10% or 300% n is a positive integer for any number of term. There is a RATE function in excel, could anyone give me any suggestion on how to determine the interest rate based on the above example please? RATE(nper,pmt,pv,fv,type,guess) RATE(20,600,20000,fv,type,guess) What are the value fv, type, guess for this example? Thank you in advance Eric |
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