Difference between revisions of "Documentation/How Tos/Calc: IPMT function"
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== IPMT == | == IPMT == | ||
− | Returns the interest | + | Returns the portion of the periodic payment which is interest for a fixed rate loan or annuity. |
=== Syntax: === | === Syntax: === | ||
− | <tt>'''IPMT(rate; period; numperiods; | + | <tt>'''IPMT(rate; period; numperiods; presentvalue; futurevalue; type)'''</tt> |
− | : <tt>'''rate'''</tt>: the interest rate per period. | + | : <tt>'''rate'''</tt>: the interest rate, per period. |
− | : <tt>'''period'''</tt>: the period | + | : <tt>'''period'''</tt>: the period of the payment whose interest portion is to be calculated, numbered from 1. |
: <tt>'''numperiods'''</tt>: the total number of payment periods in the term. | : <tt>'''numperiods'''</tt>: the total number of payment periods in the term. | ||
− | : <tt>''' | + | : <tt>'''presentvalue'''</tt>: the initial sum borrowed or invested. |
− | : <tt>''' | + | : <tt>'''futurevalue'''</tt>: the cash balance you wish to attain at the end of the term (optional - defaults to 0). With a loan, this would normally be 0. |
: <tt>'''type'''</tt>: when payments are made (optional - defaults to 0): | : <tt>'''type'''</tt>: when payments are made (optional - defaults to 0): | ||
:: 0 - at the end of each period. | :: 0 - at the end of each period. | ||
Line 18: | Line 18: | ||
: With a fixed rate loan, where you make a constant payment each period to pay off the loan over the term, some of each period payment is interest on the outstanding capital, and some is a repayment of capital. Over time (as you pay off capital), the interest becomes less and the capital repayment becomes more. | : With a fixed rate loan, where you make a constant payment each period to pay off the loan over the term, some of each period payment is interest on the outstanding capital, and some is a repayment of capital. Over time (as you pay off capital), the interest becomes less and the capital repayment becomes more. | ||
− | : <tt>'''IPMT'''</tt> returns the interest | + | : <tt>'''IPMT'''</tt> returns the interest in the payment of a specified period. <tt>'''PPMT'''</tt> returns the capital repaid in the payment of that period. Together they add up to the actual payment, given by <tt>'''PMT'''</tt>. |
+ | |||
+ | : When payments are made at the end of each period, the interest arises during that period. | ||
+ | |||
+ | : When payments are made at the start of each period, the interest arises <u>during the preceding period</u>. | ||
+ | |||
+ | : By convention, money that you receive is positive, and money you pay is negative. For a loan where you receive a lump sum at the start, <tt>'''presentvalue'''</tt> is positive. For an investment where you pay a lump sum at the start, <tt>'''presentvalue'''</tt> is negative. | ||
=== Example: === | === Example: === | ||
Line 43: | Line 49: | ||
=== Issues: === | === Issues: === | ||
* '''IPMT''' formats the result as currency if the cell has default formatting. It thus displays a real currency amount. The amount returned by '''IPMT''' may still be fractional - the display rounds this to the nearest real currency. Note that your loan provider might round in a different way (for example always downwards). | * '''IPMT''' formats the result as currency if the cell has default formatting. It thus displays a real currency amount. The amount returned by '''IPMT''' may still be fractional - the display rounds this to the nearest real currency. Note that your loan provider might round in a different way (for example always downwards). | ||
+ | * Excel claims that this function calculates the "interest payment for a given period". This seems to be wrong - it is the interest in the <u>payment</u> for that period. Calc and Excel produce the same results. Gnumeric returns slightly different results when payment is at the start of each period; possibly it calculates what Excel says it calculates. |
Revision as of 05:14, 24 September 2008
IPMT
Returns the portion of the periodic payment which is interest for a fixed rate loan or annuity.
Syntax:
IPMT(rate; period; numperiods; presentvalue; futurevalue; type)
- rate: the interest rate, per period.
- period: the period of the payment whose interest portion is to be calculated, numbered from 1.
- numperiods: the total number of payment periods in the term.
- presentvalue: the initial sum borrowed or invested.
- futurevalue: the cash balance you wish to attain at the end of the term (optional - defaults to 0). With a loan, this would normally be 0.
- type: when payments are made (optional - defaults to 0):
- 0 - at the end of each period.
- 1 - at the start of each period (including a payment at the start of the term).
- With a fixed rate loan, where you make a constant payment each period to pay off the loan over the term, some of each period payment is interest on the outstanding capital, and some is a repayment of capital. Over time (as you pay off capital), the interest becomes less and the capital repayment becomes more.
- IPMT returns the interest in the payment of a specified period. PPMT returns the capital repaid in the payment of that period. Together they add up to the actual payment, given by PMT.
- When payments are made at the end of each period, the interest arises during that period.
- When payments are made at the start of each period, the interest arises during the preceding period.
- By convention, money that you receive is positive, and money you pay is negative. For a loan where you receive a lump sum at the start, presentvalue is positive. For an investment where you pay a lump sum at the start, presentvalue is negative.
Example:
IPMT(5.5%/12; 12; 12*2; 5000; 0; 0)
- returns -12.72 in currency units. You take out a 2 year loan of 5000 currency units at a yearly interest rate of 5.5%, making monthly payments at the end of the month. In the 12th month you make your usual monthly repayment, of which 12.72 is interest.
See also:
CUMIPMT, CUMIPMT_ADD, PMT, PPMT, CUMPRINC, CUMPRINC_ADD
Derivation of Financial Formulas
Functions listed alphabetically, Functions listed by category
Issues:
- IPMT formats the result as currency if the cell has default formatting. It thus displays a real currency amount. The amount returned by IPMT may still be fractional - the display rounds this to the nearest real currency. Note that your loan provider might round in a different way (for example always downwards).
- Excel claims that this function calculates the "interest payment for a given period". This seems to be wrong - it is the interest in the payment for that period. Calc and Excel produce the same results. Gnumeric returns slightly different results when payment is at the start of each period; possibly it calculates what Excel says it calculates.