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Calculate interest for given period

You can easily Calculate interest for a given period of time in MS Excel. This can be achieved with the help of IPMT function. This function is majorly used to calculate the interest factor on loans and hire purchases.

FORMULA AND EXAMPLE

The general formula used in the IMPT function is

=IPMT(rate.period,periods,-loan)

Figure.1: Calculate interest for a given period

 

In the above example, the IMPT function is used to determine the interest on a loan amount. The formula used to calculate the interest is:

=IPMT(C7/12,1,C8,-C5)

Working:

The formula works in a manner that it first divide the interest rate by 12 since the interest rate is for the whole year. So the equation becomes C6 divided by 12.

The PAR value and PV which is present value are two important aspects of the IMPT function on the basis of which the interest is calculated. Also, the excel sheet gives the answers in $ since the data was fed in using $ as its currency.

 

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