What is the correct formula to calculate monthly payments for a loan?

The formula to calculate monthly payments for a loan using the PMT function in Excel requires specific parameters: the interest rate, the number of payments, and the loan amount. In this case, using "-B2" as the loan amount ensures that the payment value is returned as a positive number, which aligns with the standard convention that cash outflows, like loan repayments, are represented as negative amounts when using financial functions.

When entering the loan amount as a negative value, it helps maintain the consistency of cash flow in financial calculations. This approach provides clarity in interpreting the results: the payment will show as a positive number, representing the cash going out to repay the loan.

The other options either do not take into account the sign of the loan amount or incorrectly adjust the interest rate or the number of payments, which compromises the accuracy of the payment calculation. Understanding this structure is crucial for accurately applying financial functions and obtaining meaningful results in Excel.