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Entering the PMT() formula

In this example, you will need to enter the required inputs, including the PMT() function. You will need to make sure

This loan is as follows:

  • Loan balance is $10,000.
  • Interest is 6%, payable monthly.
  • Loan amortizes for 1 year.
  • No optional parameters are required.

Remember to include a negative before the PMT() formula, as a negative value will be treated as a negative payment!

Use absolute (dollar sign) referencing in the PMT() formula.

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  • In cell E6, enter the loan balance.
  • In cell E1, enter the effective interest rate; the annual interest rate divided by the number of annual periods.
  • In cell E2, enter the number of amortization periods on the loan.
  • In cell E3, enter the correct PMT() formula, referring to the cells with the interest rate, balance, and number of periods.

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