Rate

Returns a Double specifying the interest rate per period for an annuity.

Syntax: Rate( nper, pmt, pv [ , fv [ , type [ , guess ] ] ] )

nper
required Double specifying total number of payment periods in the annuity. For example, monthly payments on a four-year car loan total 4 * 12 (or 48) payment periods.
pmt
required Double specifying payment to be made each period. Payments usually contain principal and interest that doesn’t change over the life of the annuity.
pv
required Double specifying present value, or value today, of a series of future payments or receipts. For example, when borrowing money to buy a car, the loan amount is the present value to the lender of the monthly car payments to be made.
fv
optional Variant specifying future value or cash balance remaining after the final payment. For example, the future value of a loan is $0 because that’s its value after the final payment. However, to save $50,000 over 18 years for a child’s education, $50,000 is the future value. If omitted, 0 is assumed.
type
optional Variant specifying when payments are due. 0 means payments are due at the end of the period; 1 means payments are due at the beginning. If omitted, 0 is assumed.
guess
optional Variant specifying an estimate of the value to be returned by Rate. If omitted, guess is 0.1 (10 percent).

An annuity is a series of fixed cash payments made over a period of time. An annuity can be a loan (such as a home mortgage) or an investment (such as a monthly savings plan).

For all arguments, cash paid out (such as deposits to savings) is represented by negative numbers; cash received (such as dividend checks) is represented by positive numbers.

Rate is calculated by iteration. Starting with the value of guess, Rate cycles through the calculation until the result is accurate to within 0.00001 percent, and fails if it finds none in 20 tries. If it fails from the default of 10 percent, try a different value for guess.

Common Errors

Error When
-2147467259 (&H80004005), Unspecified error a rate exists (twinBASIC finds one only for a few annuities, none of them with a pmt other than 0)
Rate finds no result in 20 tries from guess (a guess of -1 or less, or far from the result, included), or nper is 0 or less
nper is less than 1 and the result is beyond the range of a Double
5 (&H5), Invalid procedure call or argument nper is less than 1 and pmt is 0
13 (&HD), Type mismatch fv or type is a string that is not a number
fv or type is Null
94 (&H5E), Invalid use of Null nper, pmt or pv is Null

Note BETA 1034

When a rate exists (twinBASIC finds one only for a few annuities, none of them with a pmt other than 0), VB6 and 64-bit VBA raise no error.

Note BETA 1034

When Rate finds no result in 20 tries from guess (a guess of -1 or less, or far from the result, included), or nper is 0 or less, VB6 and 64-bit VBA raise error 5 (&H5), Invalid procedure call or argument, instead.

Note BETA 1034

When nper is less than 1 and the result is beyond the range of a Double, VB6 and 64-bit VBA raise error 6 (&H6), Overflow, instead.

Note BETA 1034

When nper is less than 1 and pmt is 0, VB6 and 64-bit VBA raise no error.

Note BETA 1034

When guess is Null, VB6 and 64-bit VBA raise error 94 (&H5E), Invalid use of Null; twinBASIC raises none.

Note BETA 1034

When guess is a string that is not a number, or an error value, VB6 and 64-bit VBA raise error 13 (&HD), Type mismatch; twinBASIC raises none.

Note BETA 1034

When fv or type is Null, VB6 and 64-bit VBA raise error 94 (&H5E), Invalid use of Null, instead.

Example

This example uses the Rate function to calculate the interest rate of a loan given the total number of payments (TotPmts), the amount of the loan payment (Payment), the present value or principal of the loan (PVal), the future value of the loan (FVal), a number that indicates whether the payment is due at the beginning or end of the payment period (PayType), and an approximation of the expected interest rate (Guess).

Dim Fmt, FVal, Guess, PVal, Payment, TotPmts, PayType, APR
Const ENDPERIOD = 0, BEGINPERIOD = 1    ' When payments are made.
Fmt = "##0.00"    ' Define percentage format.
FVal = 0    ' Usually 0 for a loan.
Guess = .1    ' Guess of 10 percent.
PVal = InputBox("How much did you borrow?")
Payment = InputBox("What's your monthly payment?")
TotPmts = InputBox("How many monthly payments do you have to make?")
PayType = MsgBox("Do you make payments at the end of the month?", _
vbYesNo)
If PayType = vbNo Then PayType = BEGINPERIOD Else PayType = ENDPERIOD
APR = (Rate(TotPmts, -Payment, PVal, FVal, PayType, Guess) * 12) * 100
MsgBox "Your interest rate is " & Format(CInt(APR), Fmt) & " percent."

See Also