Which function calculates the total amount of interest paid over a specific number of periods?
Excel allows us to calculate the interest payment for any loan using the IPMT function. This step by step tutorial will assist all levels of Excel users in calculating the interest paid for a given period. Show Figure 1. Final result: Calculate interest for given period using IPMT function Final formula: =IPMT(4.2%/12,F2,C4,C5) Syntax of the IPMT FunctionIPMT returns the interest paid in a given period for any investment or loan =IPMT(rate, per, nper, pv, [fv], [type]) where
Setting up the DataOur table consists of two columns: Symbol (column B) and Value (column C). We input the values in column C for the interest rate (4.2% annually), total number of payments (60 months) and loaned amount ($100,000). In cell F2, we enter the payment period for which we want to calculate the interest paid, which is 1, or the 1st month. The interest paid on the first month of payment will be recorded in cell F3. Figure 2. Sample data for the IPMT formula Calculate interest paid on first monthWe want to determine the interest paid on the first month of payment for a five-year loan of $100,000, with an annual interest rate of 4.2%. In order to calculate the interest using IPMT function, we follow these steps: Step 1. Select cell F3 Step 2. Enter the formula: =IPMT(4.2%/12,F2,C4,C5) Step 3. Press Enter Since we make monthly payments, the annual interest rate 4.2% is divided by 12 to get the monthly rate. The period is 1, which stands for the first month of payment. The total number of periods is 60 because 5 years is equivalent to 60 months. The present loan value is $100,000. As a result, the interest calculated in cell F3 is -$ 350. It is a negative value because it is an outgoing cash flow, or payment. Figure 3. Entering the IPMT formula to calculate the interest for the first month Most of the time, the problem you will need to solve will be more complex than a simple application of a formula or function. If you want to save hours of research and frustration, try our live Excelchat service! Our Excel Experts are available 24/7 to answer any Excel question you may have. We guarantee a connection within 30 seconds and a customized solution within 20 minutes. Calculates the cumulative interest over a range of payment periods for an investment based on constant-amount periodic payments and a constant interest rate. CUMIPMT(0.12,12,100,1,5,0) CUMIPMT(A2,B2,C2,D2,E2,1) SyntaxCUMIPMT(rate, number_of_periods, present_value, first_period, last_period, end_or_beginning)
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See AlsoRATE: Calculates the interest rate of an annuity investment based on constant-amount periodic payments and the assumption of a constant interest rate. PV: Calculates the present value of an annuity investment based on constant-amount periodic payments and a constant interest rate. PMT: The PMT function calculates the periodic payment for an annuity investment based on constant-amount periodic payments and a constant interest rate. NPER: The NPER function calculates the number of payment periods for an investment based on constant-amount periodic payments and a constant interest rate. IPMT: The IPMT function calculates the payment on interest for an investment based on constant-amount periodic payments and a constant interest rate. FVSCHEDULE: The FVSCHEDULE function calculates the future value of some principal based on a specified series of potentially varying interest rates. FV: The FV function calculates the future value of an annuity investment based on constant-amount periodic payments and a constant interest rate. CUMPRINC: Calculates the cumulative principal paid over a range of payment periods for an investment based on constant-amount periodic payments and a constant interest rate. ExamplesWas this helpful? How can we improve it? What is the PMT function?PMT, one of the financial functions, calculates the payment for a loan based on constant payments and a constant interest rate. Use the Excel Formula Coach to figure out a monthly loan payment. At the same time, you'll learn how to use the PMT function in a formula.
How do you calculate interest for a specific period?The borrowed money which is given for a specific period is called the principal. The extra amount which is paid back to the lender for using the money is called the interest. You calculate the simple interest by multiplying the principal amount by the number of periods and the interest rate.
What function calculates the total number of periods in a loan?The NPER Function[1] is categorized under Excel Financial functions. The function helps calculate the number of periods that are required to pay off a loan or reach an investment goal through regular periodic payments and at a fixed interest rate.
How do you calculate interest for a specific period in Excel?A more efficient way of calculating compound interest in Excel is applying the general interest formula: FV = PV(1+r)n, where FV is future value, PV is present value, r is the interest rate per period, and n is the number of compounding periods.
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