This video shows the method to use the rate function in MS Excel for loan points. We calculate the adjusted percentage rate. We use rate function whose syntax is RATE(nper, pmt, pv, [fv], [type], [guess]). The unit of all the arguments is the same. Remember to use negative cash flow when money is coming into your wallet and vise versa. nper is the number of periods. pmt is the payment amount. Remember the cash flow. pv stands for present value. This is calculated by multiplying the loan amount by the amount got by subtracting the points from one. fv stands for future value or the amount left to pay at the last, type stands for payment at the end or beginning and guess is for iterations that are big. We get the rate for a period. Get the actual rate by multiplying it with number of periods. This finishes the task.
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