For which of the following purpose the function PMT is used in excel?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- Loan Repayment Schedule.
The function PMT is used to compute the loan repayment schedule.
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 |