I know the PMT function. With 3 mandatory arguments it can provide the
monthly payment amount. I would like to know the mathematical steps it
performs to arrive at the monthly payment amount.

The PMT function is an annuity, you find tons of material on annuities
online.
In any case thjis is the annuity formula:

PV = pmt * ((1 - (1 + r) ^ (-n)) / r)

where r is the interest rate an n is the number of periods. HOJw do you
arrive to it?, well the PV of an infinite series of payments PMT =

PV= PMT/r

now you need to substract the value of the anunnuity from n to infinity
which is:

PV= (PMT/r)*(1/(1+r)^n) this is the PV of series form n to infinity

You are left with:

PV(annuity) = PMT/r - PMT/r*(1/(1+r)^n) which leads to the formula
above.

regards,

S.




S Majumder wrote:
I know the PMT function. With 3 mandatory arguments it can provide the
monthly payment amount. I would like to know the mathematical steps it
performs to arrive at the monthly payment amount.

If you look in Help under PV (not PMT) you will see the formula that links
PV,FV,PMT,RATE and NPER. All quantities (except Rate) can be found by
mathematically rearranging this equation. Rate has to be computed by an
interactive method - that is why one argument is Guess allowing you to give
it a 'head start' - but it is hardly ever needed with modern high-speed
computers.
I ha ve tried to copy the formula below - not use how well it will travel
the newsgroup system
--
Bernard V Liengme
www.stfx.ca/people/bliengme
remove caps from email
Microsoft Excel solves for one financial argument in terms of the others. If
rate is not 0, then:





"S Majumder" <S wrote in message
...
I know the PMT function. With 3 mandatory arguments it can provide the
monthly payment amount. I would like to know the mathematical steps it
performs to arrive at the monthly payment amount.