In cell C9, create a formula using the PMT function to calculate the monthly loan payment using interest rate, and loan period values in cells C4:C8. Enter the formula with a - (negative) sign to return a positive value. Do not specify values for the optional arguments fv or type. In excel explain in detail
To calculate the monthly loan payment using the PMT function in cell C9 in Excel, follow these steps:
1. Select cell C9.
2. Enter the following formula: =-PMT(C5/12, C6*12, C7)
- C5/12: this converts the annual interest rate in cell C5 to a monthly interest rate by dividing it by 12.
- C6*12: this converts the loan period in years in cell C6 to the total number of monthly payments by multiplying it by 12.
- C7: this is the loan amount value.
- The - sign at the beginning of the formula is used to return a positive value for the monthly loan payment. The PMT function returns a negative value by default because it represents an outgoing payment.
3. Press Enter to calculate the monthly loan payment.
After entering the formula, Excel will calculate the monthly loan payment based on the interest rate, loan period, and loan amount values provided in cells C4:C8. This formula will dynamically update if any of the input values change, providing an accurate calculation of the monthly loan payment.