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Rate Function

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This standard VB function returns the interest rate per period for an annuity or a loan.

Syntax

Rate(nper, pmt, pv, fv, due, guess)

Argument	Description
nper	The total number of payment periods
pmt	The constant periodic payment per period
pv	The present value of the initial lump sum amount paid (as with an annuity) or received (as with a loan)
fv	The future value of the final lump sum amount required (as with a savings plan) or paid (0 as with a loan)
due	0 if due at the end of each period 1 if due at the beginning of each period
guess	An estimate for the rate returned

Returns

The interest rate per period.

Usage

In general, a guess of between 0.1 (10 percent) and 0.15 (15 percent) would be a reasonable value for guess.

Rate is an iterative function: It improves the given value of guess over several iterations until the result is within 0.00001 percent. If it does not converge to a result within 20 iterations, it signals failure.

Example

This example finds the interest rate on a 10-year $25,000 annuity that pays $100 per month.

Sub Button_Click
   Dim aprate
   Dim periods
   Dim payment, annuitypv
   Dim annuityfv, due
   Dim guess
   Dim msgtext as String
   periods = 120
   payment = 100
   annuitypv = 0
   annuityfv = 25000
   guess = .1
   ' Assume payments are made at end of month
   due = 0
   aprate = Rate(periods,-payment,annuitypv,annuityfv, _
   due, guess)
   aprate = (aprate * 12)
   msgtext = "The percentage rate for a 10-year $25,000 _
   annuity"
   msgtext = msgtext & "that pays $100/month has "
   msgtext = msgtext & "a rate of: " & Format(aprate, _
      "Percent")
End Sub

See Also

FV Function
IPmt Function
IRR Function
NPV Function
Pmt Function
PPmt Function
PV Function

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