PPMT(rate, specified_period, periods, amount <,type>)
Numeric. The interest rate per period.
Numeric. The period you want to find the repayment amount for.
Numeric. The number of payment periods over the term of the loan.
Numeric. The principal amount of the loan.
Optional. Numeric constant. Specifies whether payments are due at the beginning or end of the period. Use the default of 0 for payments that are due at the end of a period. Use 1 for payments that are due at the beginning of a period.
Numeric.
You must use consistent units to specify rate and periods. For example, if you make monthly payments on a two-year loan at a rate of 6 percent, use 0.06/12 for rate and 2 * 12 for periods. If you make annual payments on the same loan, use 0.06 for rate and 2 for periods.
a. Calculate a loan repayment
To calculate the principal that you repay in the first month of a three-year, $9,600 loan at 8.5 percent annual interest, with payments due at the beginning of each month:
PPMT(0.085/12, 1, 3*12, 9600, 1)
returns 300.92. The principal that you repay is $300.92.
b. Calculate a mortgage repayment
To calculate the principal that you repay in the last year of a twenty-five-year, $275,000 mortgage at 6.5 percent annual interest:
PPMT(0.065, 25, 25, 275000)
returns 21168.93. The principal that you repay is $21168.93.