The TRUE function is a function in Excel which is grouped under **Financial function**. This function can be used as a worksheet function (WS) which means it can be fixed into a formula in a cell of a worksheet.

The Excel RATE function returns the calculated interest rate per period of an annuity. It calculates the interest rate required to clear a loan or complete an investment in a specific period of time.

**Formula or Syntax**

`=RATE (nper, pmt, pv, [fv], [type], [guess])`

**Arguments or Parameters of the Excel RATE Function**

The Excel RATE function formula has the following parameters:

**nper**(required) – The intervals required for the payment of a loan/investment.**pmt**(required) – The constant amount paid in each interval.**PV**(required) – The present value which is a total value of all loan/investment payments now.**FV**(optional) – The future value or the desired cash balance obtained after the final payment.**fv**becomes 0 when omitted.**type**(optional) – the payment due time represented by number 0 and 1. Number 0 represents the end of the period or when omitted, while number 1 represents the beginning of the period.**guess**(optional) -A guess on what the rank would be.

**How to use the Excel RATE Function?**

Let’s consider the example for better understanding of how to use the RATE function in Excel.

- The details of the number of payments
**(nper)**, Monthly returns**(pmt)**, Present value**(pv)**are shown below.

* Figure 1. Table showing the parameters of the RATE function.*

- The RATE function is inserted into the table to calculate the interest rate. The
**”nper”**parameter is applied to the RATE function.

*Figure 2. The RATE function showing the **”nper” **parameter.*

- The
**“pmt”**parameter is applied next into the formula.

*Figure 3. The RATE function showing the **“pmt” **parameter.*

- Afterward, apply the
**“PV”**parameter to the formula and press Enter. This allows the RATE function calculate and return the interest rate.

*Figure 4. The RATE function returns the interest rate.*

**Notes**

- The
**fv**parameter must be included if the**pmt**is omitted and vice versa. - When the
**fv**is omitted, it becomes zero (0). - If the
**guess**parameter is omitted, it automatically becomes 10% by default. - The #NUM! error value is returned, if the rate does not converge within 20 iterations.

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