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Syntax:
IPMT(Rate, Per, NPer, PV [, FV] [, Type])
Description:
This returns the interest portion of the payment in the specified period, based on an investment with periodic constant payments and a fixed interest rate.
You can use this function, for example, to calculate how large the interest portion of the annuity is in a particular period for a loan.
"Period" means a payment period. For example, for a loan with monthly repayments, the third period is the third month.
The function expects the following arguments:
Rate is the interest rate (per payment period)
Per is the payment period to be considered.
NPer is the total number of payment periods.
PV is the present value (initial amount)
FV (optional) is the future value (the total value after the last payment). If the argument FV is omitted, it will be set to zero.
Type (optional) is the timing of the payments:
0 or omitted: Payment at the end of each period.
1: Payment at the beginning of each period.
Example:
A loan of $100,000 is taken out under the following terms:
Annual interest rate: 10%
Payments: monthly
Duration: 6 years
What is the interest portion of the payment (annuity) in month 32?
IPMT(10%/12, 32, 6*12, 100000) returns -534
Note that all values have to use the same time unit, months in this case, since the payments are made monthly.
Thus, in the above formula, the annual interest rate was divided by 12 to get the monthly interest rate and the number of payment periods was multiplied by 12.
Additional info:
The PPMT function is the counterpart to IPMT: It returns the principle component of the payment in this period.
The PMT function, on the other hand, returns the total amount of the payment (annuity) per period, that is, the sum of the principal portion and the interest portion.
See also: