How to use the Excel IPMT Function

In this article, we will learn how to use the IPMT function in Excel.

You must be thinking when taking out a loan from a bank how much interest amount you owe to the bank. You can calculate the amount using Excel IPMT function.

Excel IPMT function returns the amount of interest portion for a specific period.
Syntax:

=IPMT (rate, per, nper, pv, [fv], [type])

rate: Interest rate per period
Per: payment period of interest.
nper: total no. of payment period.
pv: present value or the total loan amount.
fv [optional]: Extra cash balance if required. Default to 0.
type [optional]: When payments are due. Default is 0

Let’s understand this function using it an example.
Here we have a data set and to get IPMT amount

We need to find the interest amount for 4 different months.

Use the formula to get the interest amount for first month

=IPMT( B2/12 , 1 , C2 , -A2 )

Explanation:
B2/12: rate is divied by 12 as we are calculating interest for monthly periods.
1 : per is 1 as we are calculating for the first month. If you wish to find for any specific period. Mention the number for period you wish to find the interest amount
C2 : total period to pay the amount
-A2: negative sign in front of the present value as we need the answer in positive.

Now we will change the per value to find the interest amount for a specific period.

Hope you understood how to use the IPMT function in Excel. Explore more articles on Excel satistical function here. Please feel free to state your query or feedback for the above article.