Formulas > =RATE()

How To Use RATE() Function in Google Sheets

Description

Calculates the interest rate of an annuity investment based on constant-amount periodic payments and the assumption of a constant interest rate.

Common questions about the RATE formula:
• What does the RATE function do in Google Sheets?
• How do I use the RATE function in Google Sheets?
• What arguments are used in the RATE function?
• What is the syntax of the RATE formula in Google Sheets?

How can the RATE formula be used appropriately:
• The RATE formula can be used to calculate the interest rate for a loan or other financial product.
• It can be used to determine the inflation rate of an investment or the expected return of an investment.
• It can also be used to calculate the effective annual rate, which is the rate that takes into account the compounding of interest.

How can the RATE formula be commonly mistyped:
• Mistyping the number of periods in the formula (NPER)
• Using incorrect syntax when entering the arguments into the formula
• Accidentally forgetting to use parentheses when entering the function

What are some common ways the RATE formula is used inappropriately:
• Trying to use the RATE formula to determine a repayment amount
• Trying to determine the principal amount of a loan
• Trying to determine the future value of an investment

What are some common pitfalls when using the RATE formula:
• Not understanding or forgetting to set up the proper values in the formula
• Not accounting for the compounding of interest when calculating the effective annual rate
• Setting up all required arguments but forgetting to set the guess argument, which is necessary for the formula to work properly

What are common mistakes when using the RATE Formula:
• Forgetting to include the payment argument in the formula
• Entering an incorrect value for the number of payments (NPER)
• Not understanding or accounting for compounding interest

What are common misconceptions people might have with the RATE Formula:
• Thinking that the RATE formula can be used to predict the future value of an investment 
• Thinking that the RATE formula is only used to calculate interest rates 
• Thinking that the RATE formula can be used to determine a payment amount or an exact principal amount of a loan.

How To Actually Use RATE() in Sheets

RATE(number_of_periods, payment_per_period, present_value, [future_value], [end_or_beginning], [rate_guess])

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Learn more about the RATE() formula:

Google Sheets Rate Function | Calculate interest on Loan or Investment | Google Sheets Functions

The Google Sheets RATE function returns the interest rate on a monthly or yearly basis for a loan or an investment. This function needs three mandatory attributes. These are number of periods, payment per period, and present value. The three optional attributes of the RATE function in Google Sheets are future value, end or beginning, and rate guess. If you want to calculate the amount to be paid per month or year on a loan or an investment, instead of the rate, use the PMT function.

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