Spreadsheet Applications

U5_IP-1.xlsx

In this project, you will realize that you really need to invest in a new computer to complete course assignments for the school’s use. You will create a worksheet, use the PMT function, and format a worksheet to show a comparison of two electronic computers that you are interested in purchasing. You will make a comparison of the two items and determine which one is feasible to purchase.

  • The Excel PMT function is used to calculate the payment for a loan based on constant payments and a constant interest rate.
  • Click here for more information on how to use the PMT function.

To complete this assignment, perform the following tasks:

  1. Data has been provided for you to generate a payment for each of the two products to help determine which product is feasible for you to purchase for school purposes. Click here to access the data.
  2. The loan parameters have been entered into the worksheet. Click in cells B8 and E8 to calculate the amount to finance as Price – down payment – rebate.
  3. Save the workbook as “FirstInitial_LastName_Purchase_solution.xlsx”
    • Hint: Click Insert function and select PMT for payment.
  4. Merge and center the titles in Cells A1:E1. Format your worksheet by including color as well as providing an appropriate clip art to accent the document.
  5. Indent the content in cells A9:A14 and show the Payment amount in font size 14.
  6. Indent the content in cells D9:D14 and show the Payment amount in font size 14.
  7. Save the School Computer Purchase Analysis spreadsheet. Submit the School Computer Purchase Analysis spreadsheet.

PMT function

This article describes the formula syntax and usage of the PMTfunction in Microsoft Excel.

Description

Calculates the payment for a loan based on constant payments and a constant interest rate.

Syntax

PMT(rate, nper, pv, [fv], [type])

Note  For a more complete description of the arguments in PMT, see the PV function.

The PMT function syntax has the following arguments:

  • Rate Required. The interest rate for the loan.

  • Nper Required. The total number of payments for the loan.

  • Pv Required. The present value, or the total amount that a series of future payments is worth now; also known as the principal.

  • Fv Optional. The future value, or a cash balance you want to attain after the last payment is made. If fv is omitted, it is assumed to be 0 (zero), that is, the future value of a loan is 0.

  • Type Optional. The number 0 (zero) or 1 and indicates when payments are due.

Set type equal to

If payments are due

0 or omitted

At the end of the period

1

At the beginning of the period

Remarks

  • The payment returned by PMT includes principal and interest but no taxes, reserve payments, or fees sometimes associated with loans.

  • Make sure that you are consistent about the units you use for specifying rate and nper. If you make monthly payments on a four-year loan at an annual interest rate of 12 percent, use 12%/12 for rate and 4*12 for nper. If you make annual payments on the same loan, use 12 percent for rate and 4 for nper.

Tip To find the total amount paid over the duration of the loan, multiply the returned PMT value by nper.

Example

Use the embedded workbook shown here to work with examples of this function. You can inspect and change existing formulas, enter your own formulas, and read further information about how the function works.

This example uses the PMT function to determine the monthly payment for a loan.

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