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Let us discuss one basic function of Excel, which is oftenly required for most of us. If anybody has taken a loan or plan for taking a loan, this function will become immense help for him. You will discover yourself in a smarter situation, where NO Banks/ Finance Companies may play with you. Rather you can tell the EMI before they take out the chart from their old-torn diary to tell your EMI figures.

So, let us start step by step

1) Open Excel just by Start->Program->Microsoft Excel from your desktop/ laptop

You are landing up in a blank workbook format

 

This is a blank excel workbook for you, where you need to fiddle

2) Now you need to key in the figures for you

Go to each cell and Type Out the relevant Text/ Digits.

We have considered the Principal is 1,00,000.

The Loan Completion Period is 48 months.

Interest Rate is 0.99% per month

So, let us see, how your excel workbook looks like

Now this is to notice that the figure for interest rate is showing 1 instead of 0.99%. The reason is very simple, cells in the excel sheet has not been formatted to accommodate decimal places, so it has rounded upto the next higher digit.

3) Now comes the step for implementation of the formula.

To invoke the formula, simply click on Insert->Function in the menu bar

 

Alternatively you can also click on the button in the toolbar

Choose The Function PMT from the Function List.  Please note that the function PMT is available in Financial in Function Category.  You need to select the Function Category in the Left Hand Side Window

Once you reach at this stage, be careful, now you are heading towards the final step, which is getting into the calculation mode. Dont worry, you are not to do the calculation manually, Excel will do everything on your behalf. You need to just click on the mouse and press the Enter Key quiet a few number of times

The PMT function essentially look for 3 parameters - Rate, Nper, PV.

You need to toggle between the formula, window, which you got just at the earlier stage and the main excel workbook

Once selected, press Enter Key or double-click on the mouse.

You will find your selected figure in the Rate Column.

Click on the Rate, it will take you to the main Excel Window, where you can select the value just by placing your mouse pointer. 

 Repeat this process for all Rate, Nper, Pv. Finally you will find the function window like this.

Note the result is displayed at the bottom of the function window

Once you click on OK in the Function Window, you are left with the result in the Excel main Window (from where you set off).

That’s all,  you are through!

We have assumed interest is calculated on monthly diminishing balance.

So never depend on somebofy else, be an informed buyer and become smart!