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Calculate principal for given period

Excel allows us to calculate the principal payment for any loan using the PPMT function. This tutorial will assist all Excel users in calculating a principal portion in a loan for a given month.

Figure 1. Result of PPMT function for principal payment on the 5th month

Syntax of the PPMT Function

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

where

  • rate – the interest rate for a period of payment; if payment is monthly, rate should be annual rate divided by 12
  • per – payment period for the principal payment we want to calculate
  • nper – total number of payment periods
  • pv – the present value of a loan
  • [fv] – optional; the future value of a loan after the last payment; if omitted, the default value is 0
  • [type] –   optional; specifies the timing of the payment
    • 0 (zero) – payment at the end of the period; also the default value
    • 1 – payment at the start of the period

Setting up the Data

Our table contains the arguments of the PPMT function, with corresponding descriptions and values.  We assign cell F3 to contain the PPMT formula.

Figure 2. Sample data for the PPMT formula

Calculate PPMT for the 5th month

We want to get the principal payment for the 5th period of payment in cell F3.

The interest rate is 6%/12, the period is 5, the total number of periods is 36 and the present loan value is $10,000.    

Figure 3. Entering the PPMT formula to calculate the principal payment

Follow these steps to calculate the principal payment on the 5th month:

Step 1. Select cell F3

Step 2. Enter the formula: =PPMT(D3/12,D4,D5,D6)

Step 3. Press Enter

Note :  The argument for rate is D3/12 because we must input the monthly interest rate

The formula returns the value  -$259.34 in cell F3. This is the principal payment on the 5th month.  It is a negative value because it is an outgoing cash flow, or payment.  

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