EMI of Home loan interestDo we know how to find out interest rate for our Home loan or in that connection any loan were we pay installments periodically over a time? We get many offers and different interest rates so how to know what will be our Monthly Installments we have to pay.Let us try with the following examples. Mr Raju wants to buy a car and he is ready to take a loan of $1000 for a period of three years & he wants to know the EMI at a 10% interest rate. So let us open a new Wroksheet in our MS Excel and try to help Mr Raju by using PMT financial function or Excel. Total amount of Loan $12000 Number of years Installment Now we will translate this to financial terms. Annual Rate of Interest is 10% Number of Installments 24 ( 3 years = 12x3 months) Principal ( Loan amount ) = $12000 By using PMT function PMT(rate,nper,pv,fv,type) Rate: Rate of Interest Nper is number if annuity or installments Pv Fv Type The Excel worksheet
The formula we have entered at cell A4 is =PMT(A1/12,A2*12,A3,0,1) IN the cell A1 we have shown 10% as annual interest so we have to divide it by 12 to get monthly interest. So in our formula for PMT we have used A1/12. Similarly we have used 3 years at cell A2 so we have to multiply it by 12 to get 24 monthly installments. So we have to use A2*12 in our formula for PMT. So we get our EMI , but it is a negative value as Loan amount is shown as positive value so cash outflow is displayed as negative value. You can change the loan amount and year of repayment to change the amount of EMI
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