I have a question regarding the PMT funtion. Example: loan amount = 10000,
Annual % rate is 7.5%, term is 5 years, payments per year is 12.
The regular function would be: PMT(%/12, 5*12,-10000)

How do you set this up using daily interest instead of monthly interest with
a monthly payment.

Or, is the PMT function the correct function to use??

All financial functions require that the interest rate and the payment
represent the same period. As your payment is monthly, you need to have a
monthly interest rate. To convert, follow this example.

1. Suppose your interest rate is 6% compounded daily.
2. If you borrowed $1, how much money would you owe after one month? That
will tell you what your compounded monthly interest rate is. Calculate
using:
3. =FV(6%/365,365/12,0,-1)
4. =1.005012, so your monthly rate is 0.5012%
5. Put everything together like:

=pmt(fv(6%/365,365/12,0,-1)-1,5*12,-10000)

Regards,
Fred.

"Dennis" wrote in message
...
I have a question regarding the PMT funtion. Example: loan amount = 10000,
Annual % rate is 7.5%, term is 5 years, payments per year is 12.
The regular function would be: PMT(%/12, 5*12,-10000)

How do you set this up using daily interest instead of monthly interest
with
a monthly payment.

Or, is the PMT function the correct function to use??

The effective monthly rate with daily compounding is given by (1+r/360)
^d, where d is the number of days in the period.

=PMT((1+7.5%/360)^30-1,5*12,-10000)

HTH
Kostis Vezerides

On Nov 26, 9:26*pm, Dennis wrote:
I have a question regarding the PMT funtion. Example: loan amount = 10000,
Annual % rate is 7.5%, term is 5 years, payments per year is 12.
The regular function would be: PMT(%/12, 5*12,-10000)

How do you set this up using daily interest instead of monthly interest with
a monthly payment.

Or, is the PMT function the correct function to use??