PPMT Function

Returns the principal payment for a given period for a constant payment loan or the periodic savings for a future balance.

Category:

Financial

Syntax

PPMT (rate, period, number-of-periods, principal-amount, <future-amount>, <type>)

Required Arguments

rate

specifies the interest rate per payment period.

period

specifies the payment period for which the principal payment is computed. period must be a positive integer value that is less than or equal to the value of number-of-periods.

number-of-periods

specifies the number of payment periods. number-of-periods must be a positive integer value.

principal-amount

specifies the principal amount of the loan. Zero is assumed if a missing value is specified.

Optional Arguments

future-amount

specifies the future amount. future-amount can be the outstanding balance of a loan after the specified number of payment periods, or the future balance of periodic savings. Zero is assumed if future-amount is omitted or if a missing value is specified.

type

specifies whether the payments occur at the beginning or end of a period. 0 represents the end-of-period payments, and 1 represents the beginning-of-period payments. 0 is assumed if type is omitted or if a missing value is specified.

Example

The principal payment amount of the first monthly periodic payment for a 2-year, $2,000 loan with a nominal annual interest rate of 10%, is computed as follows:
```
PrincipalPayment = PPMT(0.1/12, 1, 24, 2000);
```
This computation returns a value of 75.62.
The principal payment for a 3-year, $20,000 loan with beginning-of-month payments is computed as follows:
```
PrincipalPayment2 = PPMT(0.1./12, 1, 36, 20000, 0, 1);
```
This computation returns a value of 640.10 as the principal that was paid with the first payment.
The principal payment of an end-of-month payment loan with an outstanding balance of $5,000 at the end of three years, is computed as follows:
```
PrincipalPayment3 = PPMT(0.1/12, 1, 36, 20000, 5000, 0);
```
This computation returns a value of 389.914 as the principal that was paid with the first payment.