Exercises / Finance and business maths · 7 of 14
How much of the first payment is interest?
Each loan payment is part interest, part principal. IPMT(rate, period, periods, pv) returns the interest part for one period; PPMT returns the principal part. Early payments are mostly interest.
Your taskIn B6, use IPMT to work out the interest in payment number B4 of a loan of B1 at the annual rate in B2 over B3 years, paid monthly. Show it as a positive number.
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| Row | A | B |
|---|---|---|
| 1 | Loan amount | $250,000.00 |
| 2 | Annual rate | 6% |
| 3 | Years | 30 |
| 4 | Payment number | 1 |
| 5 | ||
| 6 | Interest in that payment |