If you have Microsoft Excel running on your computer at home or work, you can use Excels NPER function to calculate how quickly you can pay off a loan such as a mortgage.
The NPER function calculates the term, or number of regular payments, on a loan given its interest rate, payment amount, present loan balance, balloon payment (if any), and, optionally, the type-of-annuity switch.
The type-of-annuity switch is a little complicated, but here’s how it works. If you set the type-of-annuity switch to 1, Excel assumes payments occur at the beginning of the period, following the annuity due convention. If you set the annuity switch to 0 or you omit the argument, Excel assumes payments occur at the end of the period following the ordinary annuity convention.
But let me show you how the function works in theory and in practice. All of this will become quite clear, I’m sure.
The function uses the following syntax:
=NPER(rate,pmt,pv,fv,type)
For example, to calculate the number of $1,000 monthly payments required to pay off a 9% mortgage that still has a $100,000 mortgage balance, you enter the following formula into an Excel...
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