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ISPMT: Calculating interest paid during a specific period

From: Excel 2010: Financial Functions in Depth

Video: ISPMT: Calculating interest paid during a specific period

When you take out a loan, either you or your accountant might need to know how much interest you paid for a given period. For example if your business borrows $250,000 for some facility upgrades, you might be able to write off some or all of the interest paid for a given month, quarter, or year. You can discover how much interest you paid on a specific loan payment by using the ISPMT function. I've set up the sample workbook with all of the arguments that we need for the ISPMT function. We have the Rate, which is simply the annual interest rate on the loan, then we have the Period, which is the payment for which we're interested in calculating the interest component. So this would be period 14 which is the second payment of the second year.

ISPMT: Calculating interest paid during a specific period

When you take out a loan, either you or your accountant might need to know how much interest you paid for a given period. For example if your business borrows $250,000 for some facility upgrades, you might be able to write off some or all of the interest paid for a given month, quarter, or year. You can discover how much interest you paid on a specific loan payment by using the ISPMT function. I've set up the sample workbook with all of the arguments that we need for the ISPMT function. We have the Rate, which is simply the annual interest rate on the loan, then we have the Period, which is the payment for which we're interested in calculating the interest component. So this would be period 14 which is the second payment of the second year.

Then we have the Number of periods and the Number of periods is the number of payments throughout the life of the loan. In this case we have 12 monthly payments a year over two years for the total of 24. And then finally, we have the Present value, which is the amount that we've borrowed. It's 250,000. And with all those arguments in place we can create our formula. So type =ISPMT( and then first we have the rate which is in cell C3.

Now that's an annual rate and we're making monthly payments, so we can type /12 to divide the value in C3 by 12, and then type comma and the period is in C4, comma, number of periods is in C5, and then the present value of the loan is in C6. Type a right parenthesis and then look through all of the arguments. Everything looks to be good. We've divided the interest rate by 12 for monthly payments and then press Enter.

And we see that the interest paid for that payment was about $695. Now if we change it to the last period by typing 24 in cell C4 and press Enter, we see that we paid no interest. It was exclusively principal. You can use the ISPMT function to find out exactly how much of a payment was interest. You should check with your tax professional to find out if you can write off the interests you pay. If so, the ISPMT function will tell you how much that is.

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This video is part of

Image for Excel 2010: Financial Functions in Depth
Excel 2010: Financial Functions in Depth

52 video lessons · 13675 viewers

Curt Frye
Author

 
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  1. 2m 11s
    1. Welcome
      1m 6s
    2. Using the exercise files
      36s
    3. Disclaimer
      29s
  2. 28m 32s
    1. PMT: Calculating a loan payment
      3m 31s
    2. PPMT and IPMT: Calculating principal and interest per loan payment
      4m 18s
    3. CUMPRINC and CUMIPMT: Calculating cumulative principal and interest paid between periods
      4m 30s
    4. ISPMT: Calculating interest paid during a specific period
      2m 13s
    5. EFFECT and NOMINAL: Finding nominal and effective interest rates
      3m 31s
    6. ACCRINT and ACCRINTM: Calculating accrued interest for investments
      4m 15s
    7. RATE: Discovering the interest rate of an annuity
      2m 41s
    8. NPER: Calculating the number of periods in an investment
      3m 33s
  3. 19m 5s
    1. SLN: Calculating depreciation using the straight-line method
      1m 48s
    2. DB: Calculating depreciation using the declining balance method
      3m 10s
    3. DDB: Calculating depreciation using the double-declining balance method
      3m 20s
    4. SYD: Calculating depreciation for a specified period
      2m 13s
    5. VDB: Calculating declining balance depreciation for a partial period
      3m 24s
    6. AMORDEGRC: Calculating depreciation using a depreciation coefficient
      2m 27s
    7. AMORLINC: Calculating depreciation for each accounting period
      2m 43s
  4. 22m 33s
    1. FV: Calculating the future value of an investment
      2m 48s
    2. FVSCHEDULE: Calculating the future value of an investment with variable returns
      2m 21s
    3. PV: Calculating the present value of an investment
      2m 6s
    4. NPV: Calculating the net present value of an investment
      3m 17s
    5. IRR: Calculating internal rate of return
      2m 33s
    6. XNPV: Calculating net present value given irregular inputs
      2m 32s
    7. XIRR: Calculating internal rate of return for irregular cash flows
      1m 48s
    8. MIRR: Calculating internal rate of return for mixed cash flows
      2m 2s
    9. DISC: Calculating the discount rate of a security
      3m 6s
  5. 24m 12s
    1. COUPDAYBS: Calculating total days between coupon beginning and settlement
      3m 2s
    2. COUPDAYS: Calculating days in the settlement date's coupon period
      2m 48s
    3. COUPDAYSNC: Calculating days from the settlement date to the next coupon date
      3m 1s
    4. COUPNCD: Calculating the next coupon date after the settlement date
      2m 43s
    5. COUPNUM: Calculating the number of coupons between settlement and maturity
      2m 55s
    6. COUPPCD: Calculating the date of a coupon due immediately before settlement
      3m 4s
    7. DURATION: Calculating the annual duration of a security
      3m 20s
    8. MDURATION: Calculating the duration of a security using the modified Macauley method
      3m 19s
  6. 28m 43s
    1. DOLLARDE and DOLLARFR: Converting between fractional prices and decimal prices
      2m 36s
    2. INTRATE: Calculating the interest rate of a fully invested security
      2m 50s
    3. RECEIVED: Calculating the value at maturity of a fully invested security
      2m 46s
    4. PRICE: Calculating the price of a security that pays periodic interest
      3m 19s
    5. PRICEDISC: Calculating the price of a discounted security
      2m 48s
    6. PRICEMAT: Calculating the price of a security that pays interest at maturity
      1m 57s
    7. TBILLEQ: Calculating the bond-equivalent yield for a Treasury bill
      1m 50s
    8. TBILLPRICE: Calculating the price for a Treasury bill
      1m 31s
    9. TBILLYIELD: Calculating the yield of a Treasury bill
      1m 41s
    10. YIELD: Calculating the yield of a security that pays periodic interest
      2m 59s
    11. YIELDDISC: Calculating the annual yield for a discounted security
      2m 9s
    12. YIELDMAT: Calculating the annual yield of a security that pays interest at maturity
      2m 17s
  7. 12m 1s
    1. ODDFPRICE: Calculating the price of a security with an odd first period
      3m 17s
    2. ODDFYIELD: Calculating the yield of a security with an odd first period
      3m 3s
    3. ODDLPRICE: Calculating the price of a security with an odd last period
      2m 44s
    4. ODDLYIELD: Calculating the yield of a security with an odd last period
      2m 57s
  8. 1m 5s
    1. Additional resources
      1m 5s

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