Accountancy Part CUse of Spreadsheet in Business Applications

Which Excel function is commonly used to calculate loan repayment ins…

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

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → PMT

A loan is repaid in equal periodic instalments that cover both principal and interest. Excel’s built-in function PMT works out this instalment from the rate, the number of payments and the loan amount. DB and SLN are depreciation functions, and PV gives the present value of a series of payments.

NCERT (2026-27 edition):
Calculating Interest and Repayments of Loan – “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.”

NCERT (2026-27 edition):
Summary – “The function PMT is used to compute the loan repayment schedule.”