How to Use the IPMT Function in Excel
Today, we will explore the IPMT function in Excel and Google Sheets. IPMT, which stands for “Interest Payment,” is a financial function used to determine the interest portion of a specific loan payment during a given period.
Basic Syntax
The syntax for the IPMT function is identical in both Excel and Google Sheets:
IPMT(rate, period, periods, pv, [fv], [type])- rate: The interest rate for each period.
- period: The specific period for which you are calculating the interest.
- periods: The total number of payment periods in the investment or loan.
- pv: The present value or the total value currently of all future payments.
- fv: [Optional] The future value, or the cash balance you aim to achieve after the last payment is made. If not specified, it is assumed to be 0.
- type: [Optional] Indicates the timing of the payments, where 0 means payments are due at the end of the period and 1 at the beginning. If omitted, it defaults to 0.
Example: Calculating Interest Payment
Consider a situation where you have borrowed $10,000 at an annual interest rate of 5%, to be repaid over 5 years with monthly installments. To find out the interest portion of the 10th payment, you would use the following details:
| Loan Information | |
|---|---|
| Loan Amount (PV) | $10,000 |
| Annual Interest Rate | 5% |
| Number of Payments (Periods) | 60 (5 years * 12 months) |
In Excel or Google Sheets, the formula to calculate the interest for the 10th month would be:
=IPMT(5%/12, 10, 60, 10000)Entering this formula will result in obtaining the interest portion for the 10th payment of the loan.
The IPMT function is versatile and can be employed in various financial calculations, including loan amortization schedules and investment evaluations. It is important to ensure that all parameters are accurately entered to reflect the specific scenario you are analyzing.
More information: https://support.microsoft.com/en-us/office/ipmt-function-5cce0ad6-8402-4a41-8d29-61a0b054cb6f
Other functions
Returns the accrued interest for a security that pays periodic interest
Returns the accrued interest for a security that pays interest at maturity
Returns the depreciation for each accounting period by using a depreciation coefficient
Returns the depreciation for each accounting period
Returns the number of days from the beginning of the coupon period to the settlement date
Returns the number of days in the coupon period that contains the settlement date
Returns the number of days from the settlement date to the next coupon date
Returns the next coupon date after the settlement date
Returns the number of coupons payable between the settlement date and maturity date
Returns the previous coupon date before the settlement date
Returns the cumulative interest paid between two periods
Returns the cumulative principal paid on a loan between two periods
Returns the depreciation of an asset for a specified period by using the fixed-declining balance method
Returns the depreciation of an asset for a specified period by using the double-declining balance method or some other method that you specify
Returns the discount rate for a security
Converts a dollar price, expressed as a fraction, into a dollar price, expressed as a decimal number
Converts a dollar price, expressed as a decimal number, into a dollar price, expressed as a fraction
Returns the annual duration of a security with periodic interest payments
Returns the effective annual interest rate
Returns the future value of an investment
Returns the future value of an initial principal after applying a series of compound interest rates
Returns the interest rate for a fully invested security
Returns the internal rate of return for a series of cash flows
Calculates the interest paid during a specific period of an investment
Returns the Macauley modified duration for a security with an assumed par value of $100
Returns the internal rate of return where positive and negative cash flows are financed at different rates
Returns the annual nominal interest rate
Returns the number of periods for an investment
Returns the net present value of an investment based on a series of periodic cash flows and a discount rate
Returns the price per $100 face value of a security with an odd first period
Returns the yield of a security with an odd first period
Returns the price per $100 face value of a security with an odd last period
Returns the yield of a security with an odd last period
Returns the number of periods required by an investment to reach a specified value
Returns the periodic payment for an annuity
Returns the payment on the principal for an investment for a given period
Returns the price per $100 face value of a security that pays periodic interest
Returns the price per $100 face value of a discounted security
Returns the price per $100 face value of a security that pays interest at maturity
Returns the present value of an investment
Returns the interest rate per period of an annuity
Returns the amount received at maturity for a fully invested security
Returns an equivalent interest rate for the growth of an investment
Returns the straight-line depreciation of an asset for one period
Returns the sum-of-years' digits depreciation of an asset for a specified period
Returns the bond-equivalent yield for a Treasury bill
Returns the price per $100 face value for a Treasury bill
Returns the yield for a Treasury bill
Returns the depreciation of an asset for a specified or partial period by using a declining balance method
Returns the internal rate of return for a schedule of cash flows that is not necessarily periodic
Returns the net present value for a schedule of cash flows that is not necessarily periodic
Returns the yield on a security that pays periodic interest
Returns the annual yield for a discounted security; for example, a Treasury bill
Returns the annual yield of a security that pays interest at maturity