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Home Questions NDS4EQ9733
Target Exam

CUET

Subject

-- Accountancy Part C

Chapter

Use of Spreadsheet in Business Applications

Question:

Which Excel function is commonly used to calculate loan repayment instalments?

Options:

DB

SLN

PV

PMT

Correct Answer:

PMT

Explanation:

The correct answer is option 4- PMT.

The function PMT is used to compute the loan repayment schedule.

Microsoft Excel is a powerful spreadsheet application widely used for various purposes. Excel can calculate EMI (Equated Monthly Installment), interest breakdowns, and loan amortization schedules using built-in financial functions.

Computation of repayment installments is an iterative process. The Excel’s built-in function, PMT can be used to compute monthly instalments of repayment of loan. The parameters of the function PMT are as follows:

Parameter Explanation
Rate Interest rate per period for the loan
Nper Total number of payments for the loan. Its unit (e.g. year)
should match with the unit of the interest rate.
Pv Present value, i.e. the loan amount
Fv Future value, which is taken as 0, is the balance at the
end of the loan period
Type Whether payment is made at the beginning (value=1) or
at the end (value=0) of the period

 

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