How to Calculate Annuity Rental

[Azam_Saeed]

I want to calculate annuity installment in excel with following parameters:

1. interest rate
2. present value
3. future value
4. Grace period, i.e. to start repayment after certain no. of repayment
periods
5. annuity type, i.e. rental in advance, or arrears
6. no. of repayments

The PMT function in excel takes into account all the above parameters except
grace period. Can anyone tell me how take effect of grace period in above
calculation.

 

[Mike Lewis]

I think you are going to run into some trouble finding someone to help with
this scenario. You need to give everyone a better understanding of what it
is each parameter means along with what is it you are really trying to do. I
assume you are building a speadsheet to get to a goal?

 

[Fred Smith]

It depends what you mean by Grace Period. If you mean that the annuity
doesn't start until a certain number of periods down the road, you can
handle this with FV.

Let's say you have a $100,000 annuity where payments start in 6 months,
rather than the normal 1 month. What happens is the annuity is earning
interest for 5 months, then paying out. So, calculate the value five months
hence using FV. So your formula becomes something like:

=pmt(rate,nper,fv(rate,graceperiod,0,pv),fv,type)

Regards,
Fred.