I am using Excel to calculate Rates of Return where

N = 32 Months

PMT = $222.16

PV = $590

=RATE(32,222.16,-590)*12

I know the answer should be 451.83%, but Excel gives me #NUM!

I've tried turning ON the Iteration checkbox (Tools, Options,
Iteration) with no luck.

A successful answer would be to get the correct answer in Excel on the
PC. I also have a Excel on my Treo 700w with Windows Mobile 5.0. If it
could work too that would be SUPER!

Hi!!


Your formula is almost right, the problem with it is in the way Excel
works to find the solution, see the following text from the help of
the Excel's RATE function:
"RATE:
Returns the interest rate per period of an annuity. RATE is calculated
by iteration and can have zero or more solutions. If the successive
results of RATE do not converge to within 0.0000001 after 20
iterations, RATE returns the #NUM! error value.

Syntax
RATE(nper, pmt, pv, fv, type, guess)

See PV for a complete description of the arguments nper, pmt, pv, fv, and type. 
Nper is the total number of payment periods in an annuity. 
Pmt is the payment made each period and cannot change over the life of
the annuity. Typically, pmt includes principal and interest but no
other fees or taxes.
Pv is the present valuethe total amount that a series of future
payments is worth now.
Fv is the future value, or a cash balance you want to attain after the
last payment is made. If fv is omitted, it is assumed to be 0 (the
future value of a loan, for example, is 0).
Type is the number 0 or 1 and indicates when payments are due.
 
Set type equal:         If payments are due:  
0 or omitted            At the end of the period, 
1                       At the beginning of the period.

Guess is your guess for what the rate will be. 
If you omit guess, it is assumed to be 10%. If RATE does not converge,
try different values for guess. RATE usually converges if guess is
between 0 and 1."

The problem here is with the Guess, the result for the RATE part of
your formula is about 37.65%, this is far enough from 10% to make
Excel fails in finding the solution; i.e. it does not converge after
20 iteractions. So you need to introduce a Guess value in this case
0.34 is enough. Note that the solution value is very unusual, in
problems with values closer to more common numbers of the real life
the guess value can be ommited.

So this is what you need to use in the Excel formula box:
=RATE(32;-222.16;590;0;0;0.34)*12

Try with guesses lower than 0.34 (like 0.3 or 0.2) and you will get #NUM! again.


Note I: my Excel version uses ";" as arguments separator, I realize
that yours use ","; please use the apropiate separator for your
version.

Note II: note that pmt argument must be introduced as a negative value
(but the function works if pmt has different sign than pv).


Search strategy:
My own knowledge and the Excel help.


I hope this helps you. Feel free to request for a clarification if you need it.

Regards,
livioflores-ga

Exactly what I was looking for. This solution works on my Pocket PC too. Thanks!