When you calculate the future payments for a loan, assuming constant payments and interest rate, you can apply the formula for finding the future value of an ordinary annuity by solving for the annuity payment. The PMT function in Excel calculates the amount of periodic payments required to repay a loan. You can also use it to estimate how much you need to save each period to fund a future obligation. If, for instance, you want to find the amount you must save on a regular basis for a given period to cover a future college tuition fee, or what the monthly payment of a mortgage loan would be, you can employ that formula.
This open-access Excel template is a useful tool for bankers, investment professionals, corporate finance practitioners, and portfolio managers.
Annuity is among the topics included in the Quantitative Methods module of the CFA Level 1 Curriculum. Gain valuable insights into the subject with our Math for Finance course.
You can also explore other related templates such as—Present Value of Annuity, Future Value of Annuity, and Present Value of Perpetuity.