Microsoft Office Tutorials and References
In Depth Information
Figuring Loan Calculations
4. Click the cell where you entered the interest rate, or just enter the cell
address.
5. Enter /12 .
This divides the annual interest rate to get the monthly interest rate.
6. Enter a comma ( ,).
7. Click the cell where you entered the number of the payment to
analyze, or just enter the cell address.
8. Enter a comma ( ,).
9. Click the cell where you entered the number of payments, or just
enter the cell address.
10. Enter a comma ( ,).
11. Click the cell where you entered the principal amount, or just enter
the cell address.
12. Type a ), and press Enter.
The IPMT function returns the interest portion of the amount of the specified
payment. This amount will be smaller than the full periodic payment amount.
How much smaller depends on which sequential payment is being examined.
The remainder of the payment — the part that is not interest — goes to
reduce the principal.
You can use two optional arguments with IPMT:
Future Value: The amount you wish the loan to be worth at the end of
its life. The default is 0.
Type: This tells the function whether payments are applied at the end
of the period or the beginning of the period. A value of 0 indicates the
end of the period. A value of 1 indicates the beginning of the period. The
default is 0.
These optional arguments when used become the respective fifth and sixth
arguments.
Calculating payments toward principal
The PPMT function tells you the payment on principal for a given period. In
each payment period during a typical loan, the payment consists of a portion
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