## What Is the EMI?

**Equated Monthly Installment**, or **EMI**, is a fixed amount that a borrower must pay a lender on a monthly basis.

## What Is an EMI Formula?

The basic mathematical formula for EMI calculation is:

`EMI = (P X R/12) X [(1+R/12) ^N] / [(1+R/12) ^N-1]`

Here,

**P = Principal Amount**.**R = Annual Interest Rate (%)**.**N = Installment Numbers (Months)**.

The following information is given to calculate the **EMI**.

**Loan Amount of $50,000**.**Yearly Interest Rate of 8%**.**Total Duration 2 years**.

### Method 1 – Using the Excel PMT Function to Calculate the EMI

Prepare the arguments for**Â the PMT function**.

- Calculate the monthly interest rate using the following formula in
**D6**.

`=C6/12`

- Press
**ENTER**.

Calculate the duration in months.

- Enter the following formula in
**D7**.

`=C7*12`

- Press
**ENTER**.

Calculate the **EMI **using the **PMT **function.

- Enter the following formula in
**D9**.

`=-PMT(D6,D7,D5)`

- Press
**ENTER**.

**Formula Breakdown**

**D5**is the total**Loan Amount**.**D6**is the**Monthly Interest Rate**.**D7**is the**Duration**.

The output is a negative number. But the **EMI **is a positive number. To make the output positive, a **minus (-)** sign is used in **the PMT function**.

**Read More:** How to Make EMI Formula in Excel

### Method 2 – Calculate the EMI Manually

Use this formula.

`EMI = (P X R/12) X [(1+R/12) ^N] / [(1+R/12) ^N-1]`

Here,

**P = Principal Amount.****R = Annual Interest Rate (%).****N = Installment Numbers (Months).**

Convert the annual interest rate into the monthly interest rate:

- Use the following formula in
**D6**.

`=C6/12`

- Press
**ENTER**.

- Calculate the total duration in months. Use the following formula in
**D7**.

`=C7*12`

- Press
**ENTER**.

- Use the following formula in
**D9**to calculate the**EMI**.

`=(D5*D6)*((1+D6)^D7)/((1+D6)^D7-1)`

- Press
**ENTER**.

**Formula Breakdown**

**D5**is the total**Loan Amount**.**D6**is the**Monthly Interest Rate**.**D7**is the**Duration**.

**Read More:** How to Calculate EMI for Bike Loan in Excel

## EMI Calculator

In the last worksheet of the attached Excel file, you will find an **EMI **calculator with formulas. In **C5**, **C6**, and **C7**, enter:.

**Loan Amount****Interest Rate****Duration**

**EMI **will be displayed in **D9**.

**Download Practice Workbook**

Download the Excel file to practice.

**Calculate EMI in Excel: Knowledge Hub**

- How to Calculate EMI in Excel
- How to Make EMI Formula in Excel
- How to Calculate EMI for Bike Loan in Excel

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