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The Corporate Finance Institute Excel
PPMT
Get principal for given period
rate nper pv fv type
What is the PPMT Function?
The PPMT Function is categorized under Financial functions. The function will
calculate the payment on the principal for an investment based on periodic,
constant payments and a fixed interest rate for a given period of time.
In financial analysis, the PPMT function is useful in understanding the principal
components of the total payments made for the loan taken.
Formula
=PPMT( rate, per, nper, pv, [fv], [type] )
The PPMT function uses the following arguments:
1. Rate (required argument) – It is the interest rate per period.
2. Per (required argument) – It is the bond’s maturity date, that is, the date
when bond expires.
3. Nper (required argument) – It is the total number of payment periods in an
annuity.
4. Pv (required argument) – It is the present value of the loan/investment. It is
the total amount that a series of future payments is worth now.
5. Fv (optional argument) – It specifies the future value of the
loan/investment at the end of nper payments. If omitted, [fv] takes on the
default value of 0.
6. Type (optional argument) – It specifies whether the payment is made at the
start or the end of the period. It can assume a value of 0 or 1. If it is 0, it
means the payment is made at the end of the period; and if 1, the payment
is made at the start. If we omit the [type] argument, it will take on the
default value of 0, denoting payments made at the end of the period.
How to use the PPMT Function in Excel?
As a worksheet function, PPMT can be entered as part of a formula in a cell of a
worksheet. To understand the uses of the function, let us consider an example:
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