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PPMT function: Description, Usage, Syntax, Examples and Explanation

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What is PPMT function in Excel?

PPMT function is one of the Financial functions in Microsoft Excel that returns the payment on the principal for a given period for an investment based on periodic, constant payments and a constant interest rate.

Syntax of PPMT function

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

The PPMT function syntax has the following arguments:

  • Rate: The interest rate per period.
  • Per: Specifies the period and must be in the range 1 to nper.
  • Nper: The total number of payment periods in an annuity.
  • Pv: The present value — the total amount that a series of future payments is worth now.
  • Fv(Optional): The future value, or a cash balance you want to attain after the last payment is made. If fv is omitted, it is assumed to be 0 (zero), that is, the future value of a loan is 0.
  • Type(Optional): The number 0 or 1 and indicates when payments are due.
Worked Example:   How to calculate principal for given period in Excel
Set type equal to If payments are due
0 or omitted At the end of the period
1 At the beginning of the period

PPMT formula explanation

Make sure that you are consistent about the units you use for specifying rate and nper. If you make monthly payments on a four-year loan at 12 percent annual interest, use 12%/12 for rate and 4*12 for nper. If you make annual payments on the same loan, use 12% for rate and 4 for nper.

Worked Example:   How to calculate principal for given period in Excel

Examples of PPMT function

Steps to follow:

1. Open a new Excel worksheet.

2. Copy data in the following table below and paste it in cell A1

Note: For formulas to show results, select them, press F2 key on your keyboard and then press Enter.

Worked Example:   How to calculate principal for given period in Excel

You can adjust the column widths to see all the data, if need be.

Data Argument description
10% Annual interest rate
2 Number of years for the loan
$2,000.00 Amount of loan
Formula Description Result
=PPMT(A2/12, 1, A3*12, A4) Principal payment for month 1 of the loan ($75.62)
Data Argument description
8% Annual interest rate
10 Number of years for the loan
$200,000.00 Amount of loan
Formula Description (Result) Live Result
=PPMT(A11, A12, 10, A13) Principal payment for year 10 of the loan ($27,598.05)

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