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Zabo04, Computer Enthusiast
Category: Microsoft Office
Satisfied Customers: 209
Experience:  Experienced in Word, Excel, Access, Powerpoint, and Outlook.
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Hello, I have a problem with Excels RATE function. When the

Resolved Question:

Hello, I have a problem with Excel's RATE function. When the number of years ("nper") is entered as a percentage of one year (i.e., less than one year), the RATE is much higher than it should be:

1 A B C D E F
2 BEGINNING ENDING # #
3 P V F V DATE DATE DAYS YEARS
4 10000 -15000 1/1/1990 4/1/1998 3012 8.2521

EXCEL FORMULA - "=RATE(F4,0,A4,B4)" RATE = 5.04% accurate
HP-12C CALCULATOR RATE = 5.03%

10000 -15000 1/1/1990 2/15/1990 45 0.1233

EXCEL FORMULA - "=RATE(F4,0,A4,B4)" RATE = 2580.11% not accurate!
HP-12C CALCULATOR RATE = 405.52%

Sure would appreciate learning what's going on! Thanks, Jeff
Submitted: 5 months ago.
Category: Microsoft Office
Expert:  Zabo04 replied 5 months ago.

Zabo04 :

Customer:

Zabo04 :

no

Zabo04 :

use the paperclip

Zabo04 :

it says for images, but you can attach excel files too

Zabo04 :

i have it

Customer:

Not essential, but best if you can let me know when you've replied via text message to XXX-XXX-XXXX

Zabo04 :

it blocks out the numbers

Zabo04 :

so I can't see the text number

Customer:

What do you suggest? Or, try the rate function:

Customer:

whops ... =Rate(8.2521 years,0 pmt, 10,000 PV, -15,000 FV)

Customer:

whops again ... then try =Rate(0.1233 years [45 days],0 pmt,10000 PV,-15000 FV) ... the problem seems to occur when nper is a percentage of 1 year.

Zabo04 :

yes

Zabo04 :

when I put 1/4 in, or double the days, I get the answer your HP calc gets

Zabo04 :

I was looking for some equations and working it out by hand to see if I could figure out a missing assumption

Zabo04 :

I found the equation

Zabo04 :

r = ( FV / PV )1/n - 1

Zabo04 :

and when I solve that equation I get excel's answer

Customer:

the smaller the percentage of a year, the worse the discrepancy gets ... 30 days/.0822% returns a rate of over 13,000%

Zabo04 :

let me clear that up a little (1/n is an exponent)

Zabo04 :

r=(FV/PV)^(1/n)-1

Zabo04 :

did you solve for FV using the HP to check the other direction?

Zabo04 :

because when I solve for FV (FV=PV*(1+rate)^n)) I get \$15000 using 2580.11%

Zabo04 :

where n = 0.1233

Zabo04 :

I think excel is correct and the HP is wrong, based on working the problem out by hand and arriving at Excel's answer and then checking FV using the computed rate

Customer:

I get different fv .... n=.1233 int = 2580.11 => fv=41812.76

Customer:

and solving for fv using rate=405.52 returns the fv of 15000

Zabo04 :

wait one

Zabo04 :

here's my work showing every step

Customer:

sorry, i'm 50 years out of algebra, and forget how to calculate exponentials e.g. (1.5) to 8.1103. your calculated rate is 2508 - excell's is 2580 => typo?

Zabo04 :

let me check that again

Zabo04 :

yes that was a typo on my part

Zabo04 :

that's why I show my work

Zabo04 :

what I don't understand is why HP would say something different

Customer:

can't understand it either - i get the same hp results from an hp app on my phone. this is really a problem because i have 10 excel worksheets w/ 45,000+ rows - 20% of which incorporate these calculations and need, of course, to be accurate. any ideas on how to make certain it's hp and not excel?

Zabo04 :

I'm think for a minute on that

Zabo04 :

i have a way I think

Zabo04 :

it's fractions that are off

Zabo04 :

so move to whole numbers by adjusting the base to days instead of years

Zabo04 :

I fixed the first page and show my work on the second page

Zabo04 :

in excel just use the days

Zabo04 :

all of those columns should then check with the hp

Zabo04 :

then convert the interest rate to in terms of years

Zabo04 :

=((1+days)^365)-1

Zabo04 :

that column should check with the excel answer that you get using fractions less than one

Customer:

as said, algebra is really bad. if i use 45 days in excel (instead of % of a year), the RATE is .91% ... then how to convert .91 to rate equal to 405.52% ?? Sorry ...

Zabo04 :

I attached the excel file

Zabo04 :

look at column h

Zabo04 :

=((1+G10)^365)-1

Zabo04 :

Customer:

didn't get the attachment. maybe email it to me? XXX@XXXXXX.XXX

Zabo04 :

i can't send directly to email, and it blocks the address

Zabo04 :

I reattached it

Customer:

got it ... have to apologize again, but still don't see how to get from .91% to 405.52.

Zabo04 :

you don't get 405, because that's wrong

Zabo04 :

Zabo04 :

you'll get 2580

Zabo04 :

(1+.91)^365

Zabo04 :

-1

Zabo04 :

.91 needs to compound 365 times to go from daily to annual

Zabo04 :

but if you take .91 times itself the number gets smaller

Zabo04 :

so you add 100%, like tax rates

Zabo04 :

then compound it

Zabo04 :

then subtract 1 back out

Customer:

Great, thanks again.

Zabo04 :

no problem

Zabo04, Computer Enthusiast
Category: Microsoft Office
Satisfied Customers: 209
Experience: Experienced in Word, Excel, Access, Powerpoint, and Outlook.

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