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Type an open parenthesis (().Excel then provides a tip box showing the arguments of the
Click cell B4. This is the interest rate being charged for the lease.
Type the forward slash (/) for division.
Type the number 12. Since our goal is to calculate the monthly lease payments, we divide the
interest rate by 12 to convert the annual rate to a monthly rate.
Type a comma. When you type a function containing arguments, you must separate each
argument with a comma. This signals to Excel that one argument has been defined and you are
ready to define the next argument in the function.
Click cell B5. This is the term or the length of time for the lease contract. Since the term is already
expressed in months, we can just reference cell B5 and move to the next argument.
Type a comma. This advances the function to the Pv argument.
Type a minus sign (−). Remember that cell locations or values used to define the Pv argument
must be preceded with a minus sign.
Click cell B2 on the worksheet, which is the price of the car.
Type a comma. This advances the function to the [Fv] argument.
Click cell B3 on the worksheet. This is the residual value of the car. Note that cell location and
values used to define the [Fv] argument are NOT preceded by a minus sign.
Type a comma. This advances the function to the [Type] argument.
Type the number 1. We will assume that the lease payments will be due at the beginning of each
Type a closing parenthesis ()).
Press the ENTER key.
Figure 2.34 "PMT Function Constructed to Calculate Lease Payments" shows how the PMT function
should appear before pressing the ENTER key. Notice the commas that separate each argument of the
function. Also, the tip box will show the current argument being defined in bold font.