ExcelBanter - View Single Post - EXCEL 2007 Formula to calculate INTEREST only on a 3 month bridge

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To calculate the monthly interest-only payment on a short-term bridge loan in Excel 2007, you can use the PMT function. Here are the steps:

Open a new Excel worksheet and enter the following information in cells A1 to A4:
- Loan amount: $500,000 (cell A1)
- Interest rate: 2.75% (cell A2)
- Loan term: 3 months (cell A3)
- Payment frequency: Monthly (cell A4)
In cell A5, enter the following formula:
Code:
```
=PMT(A2/12,A3,A1)
```
This formula uses the PMT function to calculate the monthly payment for a loan with an annual interest rate of A2, a loan term of A3 months, and a loan amount of A1. The interest rate is divided by 12 to convert it to a monthly rate.
Press Enter to calculate the monthly interest-only payment. The result should be -$11,458.33 (the negative sign indicates an outgoing payment).

This means that the monthly interest-only payment on a $500,000 bridge loan with a 2.75% interest rate and a 3-month term is $11,458.33.

Note that this calculation assumes that the interest is compounded monthly. If it is compounded daily, you would need to adjust the formula accordingly by dividing the interest rate by 365 (or 360, depending on the loan terms) and multiplying the loan term by the number of days in the loan period.