PMT 30/365 vs 30/360

[Guest]

This is a problem that is already on the board, but is from a few months ago
so I wanted to see if anyone has figured it out. The PMT function on Excel
uses a 30/365 basis, but some loans are calculated on a 30/360 basis. Does
anyone know how to use the PMT function on a 3/360 basis?

 

[Fred Smith]

You are not correct. There's no such thing as a basis (30/365, 30/360 or
otherwise) in the PMT function.

The standard financial functions, including PMT, know nothing, nor do they
care, about the length of the period. For example =PMT(1%,12,1000) could be
12 annual payments at 1% per year, or 12 monthly payments at 1% per month.
The result is the same. The payments are $88.85 per period. It's up to you
to know what period length you are talking about.

There are bond calculating functions (particularly the COUPxxx functions)
where need to know the basis, but that's not the case with PMT.