Question

In Section 3.3, the loan instalment is computed for a given loan amount repayable over a specified period at a specified rate of interest. Modify this exercise by fixing the loan instalment amount and compute the loan period using the PMT function.

Answer 1

Rate: The interest rate per period (e.g., Annual Rate divided by 12 for monthly payments).

pmt: The fixed instalment amount paid each period (this value must be entered as a negative number because it represents cash flowing out of your pocket).

pv: The Present Value, or the total loan amount borrowed (entered as a positive number).

[fv]: The Future Value, or cash balance you want after the last payment (defaults to 0 for a fully repaid loan).

[type]: Set to 0 if payments are due at the end of the period, or 1 if due at the beginning.

To set up this modified exercise in an exam-oriented Excel grid, structure your worksheet as follows:

Cell	A (Data Label)	B (User Input/Formula)	Description/Notes
1	Annual Interest Rate	10.5%	Manual input (example rate)
2	Fixed Monthly Instalment	-₹ 15,000	Manual input (must be negative)
3	Total Loan Amount (PV)	₹ 500,000	Manual input (principal borrowed)
4	Monthly Interest Rate	=B1/12	Computes periodic interest rate
5	Total Loan Period (Months)	=NPER(B4, B2, B3)	Calculated dynamic period output
6	Total Loan Period (Years)	=B5/12	Converts the monthly result to years