Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

Emi calculation

Pankaj Arora (Learner) (3134 Points)

28 January 2012

Pls tell me EMI Calculation with an example?

Reply
Follow
Share

7 Replies

ashish gupta ( student) (1922 Points)
Replied 28 January 2012

very easy to calculate EMI. I dont have example right now. but you can try yourself in excel. Formula in excel is PMT i.e. as under:

PMT

Calculates the payment for a loan based on constant payments and a constant interest rate.

Syntax

PMT(rate,nper,pv,fv,type)

For a more complete descripttion of the arguments in PMT, see the PV function.

Rate is the interest rate for the loan.

Nper is the total number of payments for the loan.

Pv is the present value, or the total amount that a series of future payments is worth now; also known as the principal.

Fv is the future value, or a cash balance you want to attain after the last payment is made. If fv is omitted, it is assumed to be 0 (zero), that is, the future value of a loan is 0.

Type is the number 0 (zero) or 1 and indicates when payments are due.

Set type equal to	If payments are due
0 or omitted	At the end of the period
1	At the beginning of the period

Remarks

The payment returned by PMT includes principal and interest but no taxes, reserve payments, or fees sometimes associated with loans.
Make sure that you are consistent about the units you use for specifying rate and nper. If you make monthly payments on a four-year loan at an annual interest rate of 12 percent, use 12%/12 for rate and 4*12 for nper. If you make annual payments on the same loan, use 12 percent for rate and 4 for nper.

Tip To find the total amount paid over the duration of the loan, multiply the returned PMT value by nper.

Example 1

The example may be easier to understand if you copy it to a blank worksheet.

Show How to copy an example

Create a blank workbook or worksheet.
Select the example in the Help topic.
Note Do not select the row or column headers.

Selecting an example from Help
Press CTRL+C.
In the worksheet, select cell A1, and press CTRL+V.
To switch between viewing the results and viewing the formulas that return the results, press CTRL+` (grave accent), or on the Formulas tab, in the Formula Auditing group, click the Show Formulas button.

1

2
3
4

A	B
Data	Descripttion
8%	Annual interest rate
10	Number of months of payments
10000	Amount of loan
Formula	Descripttion (Result)
=PMT(A2/12, A3, A4)	Monthly payment for a loan with the above terms (-1,037.03)
=PMT(A2/12, A3, A4, 0, 1)	Monthly payment for a loan with the above terms, except payments are due at the beginning of the period (-1,030.16)

Example 2

You can use PMT to determine payments to annuities other than loans.

The example may be easier to understand if you copy it to a blank worksheet.

Show How to copy an example

Create a blank workbook or worksheet.
Select the example in the Help topic.
Note Do not select the row or column headers.

Selecting an example from Help
Press CTRL+C.
In the worksheet, select cell A1, and press CTRL+V.
To switch between viewing the results and viewing the formulas that return the results, press CTRL+` (grave accent), or on the Formulas tab, in the Formula Auditing group, click the Show Formulas button.

1

2
3
4

A	B
Data	Descripttion
6%	Annual interest rate
18	Years you plan on saving
50,000	Amount you want to have save in 18 years
Formula	Descripttion (Result)
=PMT(A2/12, A3*12, 0, A4)	Amount to save each month to have 50,000 at the end of 18 years (-129.08)

Note The interest rate is divided by 12 to get a monthly rate. The number of years the money is paid out is multiplied by 12 to get the number of payments.

Calculate payment on loan find loan payment How do I determine the monthly payment for a car loan? how much do I have to pay each month on my loan monthly payment payment PMT pmt function return periodic payment annuity constant payment interest rate xl

Upgrade to CAclubindia Pro. Subscribe Now!

ashish gupta ( student) (1922 Points)
Replied 28 January 2012

very easy to calculate EMI. I dont have example right now. but you can try yourself in excel. Formula in excel is PMT i.e. as under:

PMT

Calculates the payment for a loan based on constant payments and a constant interest rate.

Syntax

PMT(rate,nper,pv,fv,type)

For a more complete descripttion of the arguments in PMT, see the PV function.

Rate is the interest rate for the loan.

Nper is the total number of payments for the loan.

Pv is the present value, or the total amount that a series of future payments is worth now; also known as the principal.

Fv is the future value, or a cash balance you want to attain after the last payment is made. If fv is omitted, it is assumed to be 0 (zero), that is, the future value of a loan is 0.

Type is the number 0 (zero) or 1 and indicates when payments are due.

Set type equal to	If payments are due
0 or omitted	At the end of the period
1	At the beginning of the period

Remarks

The payment returned by PMT includes principal and interest but no taxes, reserve payments, or fees sometimes associated with loans.
Make sure that you are consistent about the units you use for specifying rate and nper. If you make monthly payments on a four-year loan at an annual interest rate of 12 percent, use 12%/12 for rate and 4*12 for nper. If you make annual payments on the same loan, use 12 percent for rate and 4 for nper.

Tip To find the total amount paid over the duration of the loan, multiply the returned PMT value by nper.

Example 1

The example may be easier to understand if you copy it to a blank worksheet.

Show How to copy an example

Create a blank workbook or worksheet.
Select the example in the Help topic.
Note Do not select the row or column headers.

Selecting an example from Help
Press CTRL+C.
In the worksheet, select cell A1, and press CTRL+V.
To switch between viewing the results and viewing the formulas that return the results, press CTRL+` (grave accent), or on the Formulas tab, in the Formula Auditing group, click the Show Formulas button.

1

2
3
4

A	B
Data	Descripttion
8%	Annual interest rate
10	Number of months of payments
10000	Amount of loan
Formula	Descripttion (Result)
=PMT(A2/12, A3, A4)	Monthly payment for a loan with the above terms (-1,037.03)
=PMT(A2/12, A3, A4, 0, 1)	Monthly payment for a loan with the above terms, except payments are due at the beginning of the period (-1,030.16)

Example 2

You can use PMT to determine payments to annuities other than loans.

The example may be easier to understand if you copy it to a blank worksheet.

Show How to copy an example

Create a blank workbook or worksheet.
Select the example in the Help topic.
Note Do not select the row or column headers.

Selecting an example from Help
Press CTRL+C.
In the worksheet, select cell A1, and press CTRL+V.
To switch between viewing the results and viewing the formulas that return the results, press CTRL+` (grave accent), or on the Formulas tab, in the Formula Auditing group, click the Show Formulas button.

1

2
3
4

A	B
Data	Descripttion
6%	Annual interest rate
18	Years you plan on saving
50,000	Amount you want to have save in 18 years
Formula	Descripttion (Result)
=PMT(A2/12, A3*12, 0, A4)	Amount to save each month to have 50,000 at the end of 18 years (-129.08)

Note The interest rate is divided by 12 to get a monthly rate. The number of years the money is paid out is multiplied by 12 to get the number of payments.

Pankaj Arora (Learner) (3134 Points)
Replied 28 January 2012

Hey if you know pls tell me at least don’t copy text from excel…

ashish gupta ( student) (1922 Points)
Replied 28 January 2012

ok lets understand in simple language.

first of all divide the rate of interest with 12 to get the monthly rate of interest and take the loan period in months.

now get the cummulitive present value for the interest rate for the period of loan. now divide the loan amount with the commulitive present value. result will be your EMI