rate Function

rate is a Financial function that gives the interest rate that is necessary for an investment to grow to a future value over the number of periods in the term of the investment. Use rate to calculate the compound rate of an investment.

Syntax:

  rate(future value, present value, term)

future value: the value you want the investment to have.
present value: the present value of the investment.
term: the length of time you will have the investment.

Example:
You want to find what interest rate you will need for an IRA investment of $2,000 to reach a goal of $8,000 in 20 years. Because the interest rate will be compounded monthly, multiply the term by 12 and the result of the rate by 12.

rate (8000,2000,20*12)*12 gives 6.95. This is about 7% annual rate compounded monthly.