Explain the financial function which is used to calculate interest rate per period of an annuity.

The name of the function is 'RATE'. This function returns the interest rate per period of an annuity. RATE is calculated by iteration and can have zero or more solutions. Syntax: RATE(nper, pmt, pv, fv, type, guess) where o Nper is the total number of payment periods in an annuity. o 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. If pmt is omitted, then include the fv as argument. o Pv: is the present value - the total amount that a series of future payments is worth now. o Fv: is the future value, or a cash balance attained after the last payment is made. If fv is omitted it is assumed to be $\displaystyle 0$ (the future value of a loan, for example is $\displaystyle 0$). o Type: is the number $\displaystyle 0$ or $\displaystyle 1$ and indicates when payments are due. $\displaystyle 0$ or omitted means payment is due at the end of the period. $\displaystyle 1$ means payment is due at the beginning of the period. o Guess: is the guess for what the rate will be. If omitted, it is assumed to be $\displaystyle 10$%.