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Help w/ IPMT differences
I've searched the archives of the group and looked at A LOT of posts
regarding the IPMT function, but I'm just not seeing a concrete answer to this very simple problem.. I am doing basic interest calculations on loan amounts to compare various options, but the values I'm coming up with are different than what I get with an amortization schedule. For example, a $100,000 loan, 5.5% per year, 180 total payments - what is the cumulative interest at the end of the first year? According to my amortization schedule it is $5389.81. However, if I use the function: =IPMT(0.055,1,180,100000) the result is $5500.00 Its a minor difference, but I can't figure out how to get these numbers to reconcile. Can anyone tell me where I am going wrong and what method/formula to use to make them equal? Thanks very much. |
#2
Posted to microsoft.public.excel.programming,microsoft.public.excel.functions
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Help w/ IPMT differences
On Thu, 24 Jul 2003 21:43:14 -0400, Lewis Drakker wrote:
I've searched the archives of the group and looked at A LOT of posts regarding the IPMT function, but I'm just not seeing a concrete answer to this very simple problem.. I am doing basic interest calculations on loan amounts to compare various options, but the values I'm coming up with are different than what I get with an amortization schedule. For example, a $100,000 loan, 5.5% per year, 180 total payments - what is the cumulative interest at the end of the first year? According to my amortization schedule it is $5389.81. However, if I use the function: =IPMT(0.055,1,180,100000) the result is $5500.00 Its a minor difference, but I can't figure out how to get these numbers to reconcile. Can anyone tell me where I am going wrong and what method/formula to use to make them equal? Thanks very much. You are using the wrong formula. The IPMT formula says you are making a SINGLE payment at the end of ONE year at 5.5% interest. But this is not how you are paying off the loan. Your amortization table has you making monthly payments. Each monthly payment also pays down the amount of principal so you are not paying the 5.5% interest on the full amount for the full year. The function you want to use is CUMIPMT. Don't forget that the interest for each payment is 5.5%/12. See HELP for further info. --ron |
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