[Option II] Question 12 [Computerized Accounting]

Last updated at April 16, 2024 by

Name and explain the function which returns the future value of an investment which has constant payment and interest.

Answer

The PMT function calculates the periodic payment for a loan having equal installments and a constant rate of interest.

 

PMT Function - PMT (rate, nper, pv, [fv], [type]), where

Rate is the interest rate per period,

Nper is the number of periods,

P = Monthly Payment

Pv is the present value or the amount the future payments are worth presently, future value or cash balance that after the last payment is made (a future value of zero when we omit this optional argument) Type is the value 0 for payments made at the end of the period or the value 1 for payments made at the beginning of the period.

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Transcript

Name and explain the function which returns the future value of an investment which has constant payment and interest. Answer The PMT function calculates the periodic payment for a loan having equal installments and a constant rate of interest. PMT Function - PMT (rate, nper, pv, [fv], [type]), where Rate is the interest rate per period, Nper is the number of periods, P = Monthly Payment Pv is the present value or the amount the future payments are worth presently, future value or cash balance that after the last payment is made (a future value of zero when we omit this optional argument) Type is the value 0 for payments made at the end of the period or the value 1 for payments made at the beginning of the period.

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Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 14 years and a teacher from the past 18 years. He teaches Science, Economics, Accounting and English at Teachoo