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PPMT
Returns the payment on the principal for a given period for an investment based on periodic, constant payments and a constant interest rate.
Syntax
PPMT(rate,per,nper,pv,fv,type)
For a more complete description of the arguments in PPMT, see PV.
Rate is the interest rate per period.
Per specifies the period and must be in the range 1 to nper.
Nper is the total number of payment periods in an annuity.
Pv is the present value — the total amount that a series of future payments is worth now.
Fv is the future value, or a cash balance you want to attain after the last payment is made. If fv is omitted, it is assumed to be 0 (zero), that is, the future value of a loan is 0.
Type is the number 0 or 1 and indicates when payments are due.
| Set type equal to | If payments are due |
|---|---|
| 0 or omitted | At the end of the period |
| 1 | At the beginning of the period |
Make sure that you are consistent about the units you use for specifying rate and nper. If you make monthly payments on a four-year loan at 12 percent annual interest, use 12%/12 for rate and 4*12 for nper. If you make annual payments on the same loan, use 12% for rate and 4 for nper.
Example 1
The example may be easier to understand if you copy it to a blank spreadsheet.
How?
- Create a blank spreadsheet.
- Select the example in the Help topic.
Selecting an example from Help
- Press CTRL+C.
- In the spreadsheet, select cell A1, and press CTRL+V.
- To switch between viewing the formula that returns the result and the result in the cell, select the cell and press F2 and then ENTER, or click Commands and Options on the spreadsheet toolbar, click the Formula tab, and look in the Formula in active cell (active cell) box.
| Data | Description (Result) |
|---|---|
| 10% | Annual interest rate |
| 2 | Number of years in the loan |
| 2000 | Amount of loan |
| Formula | Description (Result) |
| =PPMT(A2/12, 1, A3*12, A4) | Payment on principle for the first month of loan (-75.62) |
Note The interest rate is divided by 12 to get a monthly rate. The years the money is paid out is multiplied by 12 to get the number of payments.
Example 2
The example may be easier to understand if you copy it to a blank spreadsheet.
- Create a blank spreadsheet.
- Select the example in the Help topic.
Selecting an example from Help
- Press CTRL+C.
- In the spreadsheet, select cell A1, and press CTRL+V.
- To switch between viewing the formula that returns the result and the result in the cell, select the cell and press F2 and then ENTER, or click Commands and Options on the spreadsheet toolbar, click the Formula tab, and look in the Formula in active cell (active cell) box.
| Data | Description (Result) |
|---|---|
| 8% | Annual interest rate |
| 10 | Number of years in the loan |
| 200,000 | Amount of loan |
| Formula | Description (Result) |
| =PPMT(A2, A3, 10, A4) | Principal payment for the last year of the loan with the above terms (-27,598.05) |