How to do this in excel 4. Nadia needs to calculate the monthly payment for the loan to fund the law firm's transition to the cloud. In cell F5, enter a formula using the PMT function. Insert a negative sign (-) before the function in the formula to display the result as a positive amount. Use defined names for the rate, nper, and pv arguments as follows: rate argument: Divide the Rate by 12 to use the monthly interest rate. nper argument: Multiply the Term by 12 to specify the number of months as the
periods. pv argument: Use the Loan_Amount as the present value of the loan.
To calculate the monthly payment for the loan using the PMT function in Excel, follow these steps:
1. Define the following names for the rate, nper, and pv arguments:
- Rate: Divide the annual interest rate by 12 to get the monthly interest rate. You can define this by going to the Formulas tab, clicking on Name Manager, and then clicking New. Enter "Rate" as the Name, enter the formula "=Annual_Interest_Rate/12" in the Refers to field, and click OK.
- Term: Multiply the number of years of the loan by 12 to get the total number of months. Define this name using the same process as above.
- Loan_Amount: Use the total loan amount as the present value of the loan. Define this name using the same process as above.
2. In cell F5, enter the following formula using the PMT function:
=-PMT(Rate, Term, Loan_Amount)
3. Press Enter to calculate the monthly payment for the loan. The result will be displayed as a positive amount because of the negative sign (-) added before the function.
By following these steps, you can calculate the monthly payment for the loan using the PMT function in Excel with the specified defined names for the rate, nper, and pv arguments.