Based on loan term, instalment, and the loan amount, this function calculates the associated compound interest rate. This function is designed to be equivalent to the Excel function RATE. It calculates a fixed interest rate.
RATE(nper, pmt, pv, fv = 0)
| nper | Number of periods |
|---|---|
| pmt | Instalment per period (should be negative) |
| pv | Present value i.e. loan advance (should be positive) |
| fv | Future value i.e. redemption amount |
rate The corresponding compound interest rate required to arrive at an FV of 0
RATE(12,-500,3000) # 0.126947 Taken from excel#> [1] 0.1269469df<-data.frame(nper=c(12,12),pmt=c(-500,-400),pv=c(3000,3000)) RATE(df$nper,df$pmt,df$pv) # c(0.126947,0.080927) Taken from excel#> [1] 0.12694689 0.08092716