Description
The Excel IPMT function calculates the interest payment, during a specific period of a loan or investment that is paid in constant periodic payments, with a constant interest rate.
The syntax of the function is :
IPMT( rate, per, nper, pv, [fv], [type] ) .
Where the arguments are as follows:
Cash Flow Convention :
Note that, in line with the general cash flow convention, outgoing payments are represented by negative numbers and incoming payments are represented by positive numbers. This is seen in the examples below.
Excel Ipmt Function Examples.
In each of the examples below, the spreadsheet on the left shows the format of the Ipmt function, and the spreadsheet on the right shows the result.
Example 1
The following spreadsheet shows the Excel Ipmt function used to calculate interest payment during months 1 and 2 of a loan of $50,000 which is to be paid off in full after 5 years. Interest is charged at a rate of 5% per year and the payment to the loan is to be made at the end of each month.
Example 2
In the spreadsheet below, the Excel Ipmt function is used to calculate the interest payment during quarters 1 and 2 of a loan for $10,000, that is to be reduced to $5,000 over a period of 2 years, by a series of constant quarterly payments. Interest is charged at a rate of 3.5% per year and the payment is made at the beginning of each quarter.
Ipmt Function Errors
If you get an error from the Excel Ipmt function, this is likely to be one of the following:
Common Errors
Also, the following problem is encountered by some users:
Common Problem
The result from the Excel Ipmt function is much higher or much lower than expected.
Possible Reason
Many users, when calculating monthly or quarterly payments, forget to convert the interest rate or the number of periods to months or quarters.
Solve this problem by ensuring that the rate and the nper arguments are expressed in the correct units. i.e. :
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