## Excel PPMT Function

The PPMT function calculates the payment on the principal for an investment based on periodic, constant payments and a constant interest rate for a given period.

#### Syntax

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

#### Arguments

• Rate (required): The interest rate per period.
• Per (required): The specific period of payments; Must be an integer between 1 and nper.
• Nper (required): The total number of payments for the investment.
• Pv (required): The present value, or total value of all payments now.
• Fv (optional): The future value or a cash balance you want to attain after the last payment. If omitted, it will default to 0 (zero).
• Type (optional): It specifies when payments are due.

#### Return value

The PPMT function returns the principal portion of a given loan payment.

#### Function notes

1. Make sure that the units used to specify the rate and nper are consistent. If we want to know the principal payment for a specific month on an eight-year loan at an annual interest rate of 5 percent, provide 5%/12 as the rate argument and 8*12 as the nper argument. 5%/12 represents the monthly interest rate and 8*12 means the total number of loan periods in months.
2. By default, the pv argument is entered as a negative value.

#### Examples

In the example shown below, suppose we need to calculate the payment on the principal for the third year on a \$10,000 loan with an annual interest rate of 5% and an 8-year duration. Please do as follows.

Copy the formula below into cell F4 and press the Enter key to get the result.

=PPMT (C4, 3, C5, C6)

Notes:

1. In the above formulas, the fv and type arguments are omitted, meaning that the future value is 0, and the payments are due at the end of each period.
You can add the two arguments if you want:

=PPMT (C4, 3, C5, C6, 0, 0)

2. To know the principal payment for a specific month, such as the third month, we can change the above formula to this version:

=PPMT (C4/12, 3, C5*12, C6)

3. The results returned by the PPMT function are negative numbers, displayed in red with parentheses.
4. We can directly input the values of the arguments in the formula.
• The formula to return the payment on the principal for the third year becomes:

=PPMT (5%, 3, 8, 10000)

• The formula to return the payment on the principal for the third month becomes:

=PPMT (5%/12, 3, 8*12, 10000)

#### Relative Functions:

• Excel CUMIPMT Function
The CUMIPMT function returns the cumulative interest paid on a load between the start period and end period.

• Excel CUMPRINC Function
The CUMPRINC function returns the cumulative principal paid on a load between the start period and end period.

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