Syntax: PPMT(R, P, NP, PV, FV[, T])
R = interest rate per period
P = the period for which the interest will be calculated
NP = the total number of payment periods
PV = present value of the investment
FV = future value or a cash balance you would like to attain at the end of the last period
T = (Optional) timing of the payment:
|0||payment is made at the end of the period|
|1||payment is made at the beginning of the period|
PPMT returns the payment on the principal for a specific period for an investment based on periodic, constant payments and a constant interest rate.
Make sure the units used be R and NP are consistent. For example, for a 5 year loan with 12% annual interest, if you make payment monthly, use 12%/12 for (monthly) R and 5*12 for NP. If you make annual payment on the same loan, use 12% for R and 5 for NP.
PPMT(10%/12, 1, 60, 55000, 0, 0) = 710.2541
PPMT(10%/12, 1, 60, 55000, 1000) = 723.1678
Excel function: N/A