Excel 2000 in a Nutshell

Name

IPMT

Synopsis

Use IPMT to determine the interest payment of an investment for a specific period. This function is used with both loans and investments, such as a savings account. This function is used only with investments that have both constant payments and a constant interest rate.

To Calculate

=IPMT(Rate, Per, Nper, PV, FV, Type)

The FV and Type arguments are optional; but the FV argument is omitted only when calculating the interest payment for a loan. All other arguments are required for this function.

Rate

Indicates the interest rate used to calculate the rate for each period. For example, if you make monthly payments and the interest rate is 12% you need to specify an interest rate of 0.01 (0.12/12) as the rate for each month.

Per

An integer value between 1 and the value specified for the Nper argument indicating the period that you want to calculate the interest payment for. For example, if you want to see the amount of interest paid during the third month of a loan, the value of this argument would be 3.

Example

Figure 12-13 illustrates how IPMT is combined with PMT and ISPMT to determine the amount of each payment that is applied to principal and the interest amount. In this example, we are calculating the payments for a mortgage, so the payment amounts are negative since this is money to be paid out and not received. Also, we did not specify a future value for the functions since the future value of a loan should be 0.

Figure 12-13. IPMT, PMT, PPMT, and ISPMT provide ...