Function for payments

  • Thread starter Thread starter Joe
  • Start date Start date
J

Joe

Can anyone please help?
What function is used to get the result of how much money
to invest
yearly when my goal is after 20 years to have $50,000.00?

I already invested $5,000 and,
The interest rate will be 12% (APR)

If I use =Pmt(0.12,20,0,50000,1) the results of $619.58 is
correct.
The 0 on the 4th column means I have nothing invested as
of now.

However if I use =Pmt(0.12,20,5000,50000,1) the results of
$1217.25
doesn't make any sense.

If I use the PPMT function, I get the same problem.
=PPmt(0.12,1,20,5000,50000,1) = $1217.25
=PPmt(0.12,1,20,0,50000,1) = $619.58

What is the right function?

Thanks

Joe
 
PMT is the correct function, except you are doing it wrong.

pmt(0.12,20,-5000,50000,1)

Remember, money you put in is negative, so to indicate that you already have
$5000 in the balance, it has to be negative.

Kelvin
 
Thanks Kelvin
I got the answer of $21.92

However, I'm missing something, if I change it to $6,000
like
=Pmt(0.12,20,-6000,50000,1)
The result = $97.61

Or if I change the (APR) to 15% like
=Pmt(0.15,20,-5000,50000,1)
The result = $270.20
Does this make sense?

Thanks Again
Joe
 
Your other 2 examples are giving strange answers because the function cannot
calculate the correct answer for you. If you start with $6,000 at 12%
interest, you will reach 50,000 after 20 years without having to add any
money. The same goes for $5,000 at 15%. The function does not have a check
to see if the answers make sense, it is just doing the math. The function
is performing the math correctly, its just that your inputs will not allow
the math to result in reasonable answers.

Kelvin
 
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