How to Use the PPMT Function in Excel
The PPMT function in Excel and Google Sheets calculates the amount of a payment that goes toward the principal of an investment for a specified period. This function is particularly valuable for understanding the portion of each payment that reduces the principal of a loan.
Using the PPMT Function
In both Excel and Google Sheets, the syntax for the PPMT function is:
=PPMT(rate, period, nper, pv, [fv], [type])- rate: The interest rate for each payment period.
- period: The specific period for which the principal payment is calculated. This must be a value between 1 and nper, inclusively.
- nper: The total number of payment periods in the investment’s term.
- pv: The present value, or the total value of all future payments as currently valued.
- fv (optional): The future value, or the cash balance that will be achieved after the final payment. If not specified, it defaults to 0.
- type (optional): This determines whether payments are made at the beginning (1) or the end (0) of the period. When omitted, it is assumed to be 0.
To illustrate how the PPMT function can be used, consider the following example:
| Rate (annual) | Period | nper | PV | Payment | PPMT |
|---|---|---|---|---|---|
| 6% | 4 | 5 | 10000 | =PMT(6%/12, 5, -10000) | =PPMT(6%/12, 4, 5, -10000) |
In this example, the PMT function is first used to compute the total payment for the perod, and then the PPMT function calculates how much of that payment reduces the principal.
The use of the PPMT function facilitates a deeper analysis of loan payments, showing how each installment contributes to decreasing the owed principal amount.
More information: https://support.microsoft.com/en-us/office/ppmt-function-c370d9e3-7749-4ca4-beea-b06c6ac95e1b
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 interest payment for an investment for a given period
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 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