When you pay back a loan, each payment has a principal component and an interest component. Payments early in the loan’s life consist mostly of paying down the interest, while payments late in the loan’s life are almost entirely principal. You can determine the cumulative interest and principal you’ve paid on a loan by using the CUMIPMT and CUMPRINC functions.
- [Voiceover] When you pay back a loan,…each payment has a principal component…and an interest component.…In this movie, I will show you…how to calculate the cumulative, or total, principal…paid off over a specific period within a loan…and do the same for the total interest paid…during that same period.…My sample files is Cumulative_01_03,…and that's an Excel workbook that you can find…in the Chapter One folder of your exercise files collection.…So let's say that I run a business,…and I want to take out a loan for $7,320,000.…
My interest rate is 6.125%,…and the number of payments I'll make is 360,…and those payments will be made once a month,…so I will be making 12 payments a year.…If I want to calculate the total principal…and total interest paid off from a starting period…to an ending period, in this case period one to period 12,…then I can use two separate functions for that.…I'll click in cell C11 and type an equal sign…to calculate the total principal paid off…from period one to period 12.…
For accumulative principal, I use the function cumprinc,…
- Analyzing loans, payments, and interest
- Calculating depreciation
- Determining values and rates of return
- Calculating bond coupon dates and security durations
- Calculating security prices and yields
- Calculating prices and yields of securities with odd periods
Skill Level Intermediate
1. Analyzing Loans, Payments, and Interest
2. Calculating Depreciation
3. Determining Values and Rates of Return
4. Calculating Bond Coupon Dates and Security Durations
5. Calculating Security Prices and Yields
6. Calculating Prices and Yields of Securities with Odd Periods
Additional resources1m 24s
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