19 Dec 2022

Posted on:

18 Dec 2022

0

# Data table amount to be paid: can we use the PMT function ?

I would like to know if the =PMT function is applicable for the sensitivity analysis, and if not can you explain the formulae used . I tried to use the =PMT function to find amount to be repaid monthly and multiplied it by the number of months for total repayment and I did not arrive at the same answer (1611). Also, I tried  using my answer for the sensitivity analysis but my values remained the same as for the different    variations in time and rate. does the formulae applied in amount to be paid affect the data table?

here is the formula I used to calculate the monthly repayment: =PMT(10%/12,5*12,-1000)
=21.25
total amount to be paid in five years:= 21.25* 60months
=1274.

thanks.

Instructor
Posted on:

19 Dec 2022

0

Hi,
Good to hear from you!
Please take into consideration the following:

1. The PMT function gives you both the amount to be repaid and interest expense
2. The repayment amounts are not equal throughout the lifecycle of the loan. They vary because the interest expense decreases when we repay the loan.

Hope this helps!
Best,
Ned