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# How to Calculate the IPMT Function in Excel: A Step-by-Step Guide

Duration: 2:18
Submitted: 7 months ago
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If you're looking for a step-by-step guide on how to calculate the IPMT function in Excel, look no further! In this blog post, we'll show you how to use this function to calculate an interest part of a payment.

We'll also provide a few examples so you can see how it works. Don't let the intimidating name scare you – this function is actually quite simple to use!

Table of Content;

00:00 INTRODUCTION

00:20 IPMT Function in Excel

02:00 conclusion

## What is IPMT Function in Excel?

The IPMT function in Excel is used to calculate the interest part of a payment. This function can be very helpful when you need to know how much money needs to be paid back on a loan or mortgage.

## When to use IPMT Function in Excel?

The IPMT function can be used in a number of different scenarios, such as when you're calculating how much money needs to be paid back on a loan or mortgage. It can also come in handy for other financial calculations, such as figuring out how much interest will be charged on a credit card balance.

## How to use the IPMT Function in Excel?

The IPMT function is actually quite simple to use. All you need to do is enter the following into a cell:

=IPMT(rate,per,nper,pv,[fv],[type])

Where:

- rate is the interest rate for the loan or mortgage

- per is how often the payments are made (usually monthly)

- nper is the number of payments over the lifetime of the loan or mortgage

- pv is the present value of the loan or mortgage

- [fv] and [type] are both optional arguments, and they can be left blank if you don't need to use them. If you do include them, [fv] is the future value of the loan or mortgage and [type] is either 0 (for monthly payments) or -l (for yearly payments).

Now that you know how to use the IPMT function, let's take a look at some examples.

## Example #01: Calculating Monthly Payments

In this example, we'll calculate the monthly payments for a loan with an interest rate of 0.06 and monthly payments.

We'll also use the [fv] and [type] arguments to figure out how much the loan will actually be paid off after 12 months.

=IPMT(0.06,12,12,100000)

The result of this calculation is that the monthly payments are \$695.07 and the loan will be paid off in 12 months.

## Example #02: Calculating Yearly Payments

In this example, we'll calculate the yearly payments for a loan with an interest rate of 0.06 and yearly payments.

We'll also use the [fv] and [type] arguments to figure out how much the loan will actually be paid off after 12 months.

=IPMT(0.06,-l,12,100000)

The result of this calculation is that the yearly payments are \$705.84 and the loan will be paid off in 12 months.

## Conclusion

Hopefully this blog post has helped you understand how to use the IPMT function in Excel. This function can be a lifesaver when you need to calculate payments for a loan or mortgage. Happy calculating!