Let’s have a quick look at the arguments of this function. We can calculate the the monthly payment by using the PMT function.If there was no interest rate, monthly payment would be ($300,000 / 360 = $833.33).We need to calculate themoney we are paying towards interest each month.We need to calculate the payments to be made every month.The Bank has approved $300,000as the loan amount.Syntax of “IPMT” function: =IPMT (Rate, Which Period, Nper, -Loan Amount) And also Returns the amount of the interest within the monthly payment (the monthly payment is comprised of the principal + interest). IPMT: Returns the interest payment for a given period for a loan based on periodic, constant payments and a constant interest rate. Syntax of “PMT” function: =PPMT (Rate, Which Period, Nper, -Loan Amount) And also returns the sum of the principal within the monthly payment (the monthly payment is comprised of the principal + interest). PPMT: Returns the amount on the principal for a given period for a loan based on periodic, constant payments and a constant interest rate. Syntax of “PV” function: =PV (Rate, Nper, Pmt) Returns the current value for a series of payment with a constant interest rate. PV: The present value, the total amount that a series of future payments is worth now. Syntax of “NPER” function: =NPER (Rate, Pmt, -Loan Amount) Rate is calculated by iteration can have zero or more solutions. RATE: Returns the percentage of interest on the loan, when the number of payments is constant. Syntax of “PMT” function: =PMT (Rate, Nper, -Loan Amount) Calculates the payment for a loan based on constant payments and a constant interest rate. PMT: Returns the regular monthly payment on the loan (principal + interest) when the interest for each of the monthly payments is constant. All these formulae will help to create the amortization table in Excel. To calculate loan payment we will use the “RATE”, “NPER”, “PV”, “PMT”, “PPMT” and “IPMT” formulae.
In this article we will learn about how to calculate the loan amortization schedule in Excel.
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