Question about financial calculation PMT
 

I want to verify that I am using the PMT function correctly. The situation
is someone who has a sum of money in the bank earning a certain return. They
want to withdraw a fixed amount each month so that at the end of 20 years
the account balance is zero. The figures a

Initial balance: 200,000
Annual return: 6%
Years: 20

I am using this:

=PMT(.06/12, 20*12, -200000)

Have I got this right? Thanks


--
Peter Aitken

Remove the crap from my email address before using.

Yes its correct @ 1432.86 per month
"Peter Aitken" wrote in message
...
I want to verify that I am using the PMT function correctly. The situation
is someone who has a sum of money in the bank earning a certain return.
They want to withdraw a fixed amount each month so that at the end of 20
years the account balance is zero. The figures a

Initial balance: 200,000
Annual return: 6%
Years: 20

I am using this:

=PMT(.06/12, 20*12, -200000)

Have I got this right? Thanks


--
Peter Aitken

Remove the crap from my email address before using.

Would this be the same formula then to determine the monthly payment
required to pay off a mortgage within a certain number of years? That
is, the morgage is 200,000, the interest rate is 6%, and the term is
20 years - and the required monthly payment is 1432.86.

How would the formula be changed to reflect the case where the
payments are made every 2 weeks, but the interest is still charged
monthly? Thanks.


On Wed, 30 Mar 2005 08:56:23 -0500, "N Harkawat" wrote:

Yes its correct @ 1432.86 per month
"Peter Aitken" wrote in message
...
I want to verify that I am using the PMT function correctly. The situation
is someone who has a sum of money in the bank earning a certain return.
They want to withdraw a fixed amount each month so that at the end of 20
years the account balance is zero. The figures a

Initial balance: 200,000
Annual return: 6%
Years: 20

I am using this:

=PMT(.06/12, 20*12, -200000)

Have I got this right? Thanks


--
Peter Aitken

Remove the crap from my email address before using.

Yes, this would apply to a mortgage. Note however that the unrounded
value is 1432.862..., so the lender may want 1432.87 monthly instead of
accumulating a larger final payment.

Your second question would depend on exactly how the interest is charged
relative to the intervening payments, but would be in the ballpark of
=PMT(0.06/26, 20*26, -200000)

Jerry

wrote:

Would this be the same formula then to determine the monthly payment
required to pay off a mortgage within a certain number of years? That
is, the morgage is 200,000, the interest rate is 6%, and the term is
20 years - and the required monthly payment is 1432.86.

How would the formula be changed to reflect the case where the
payments are made every 2 weeks, but the interest is still charged
monthly? Thanks.


On Wed, 30 Mar 2005 08:56:23 -0500, "N Harkawat" wrote:


Yes its correct @ 1432.86 per month
"Peter Aitken" wrote in message
...

I want to verify that I am using the PMT function correctly. The situation
is someone who has a sum of money in the bank earning a certain return.
They want to withdraw a fixed amount each month so that at the end of 20
years the account balance is zero. The figures a

Initial balance: 200,000
Annual return: 6%
Years: 20

I am using this:

=PMT(.06/12, 20*12, -200000)

Have I got this right? Thanks


--
Peter Aitken

Remove the crap from my email address before using.