Mac Works: Computing Interest/Growth Rate on a Single Payment

PSS ID Number: Q102143 Article last modified on 10-22-1998

3.0

MACINTOSH

## Contents

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The information in this article applies to:

- == Microsoft Works for the Macintosh, version 3.0 and 4.0 ==

# SUMMARY

In Microsoft Works, the RATE() function assumes a stream of payments. If you would like to compute the interest rate for a single payment (present value) over a given period, use this formula

=((fv/pv)^(1/n))-1

where “pv” equals the value today (present value), “fv” equals the value at the end of the time period (future value), and “n” equals the total number of periods.

Keep in mind that the rate will be for one period, for example, for 10 years. In this case, use N=10 to get the annual rate or N=120 (10*12) to get the monthly rate.

## Example

To find the annual rate of interest accrued by $1000 invested today with an expected yield of $5000 in 10 years, use:

=((5000/1000)^(1/10))-1

This means that it would require an interest rate of 17.46 percent compounded annually to yield $5000 in 10 years from an initial investment of $1000.

# Additional query words: 3.00 mwksss m_eXcel

Version : 3.0 Platform : MACINTOSH Issue type : kbhowto ============================================================================= Copyright Microsoft Corporation 1998.