Rate
The interest rate per period.
Period
The period for which interest should be calculated.
NumberOfPeriods
The total number of payment periods in the term.
Principal
The initial sum borrowed.
Returns
The interest paid in a period.
Returns the interest paid in a given period for a loan with equal principal repayments. Unlike IPMT, which assumes level total payments (as with a standard amortizing loan), ISPMT assumes that the same amount of capital is repaid in every period, so the interest charge decreases linearly over the life of the loan.
Examples
Returns $-512. Consider a five-year loan of $16,000 at 4% annual interest with yearly payments. Each period, you repay $16,000 / 5 = $3,200 of capital. After the first repayment the outstanding balance is $16,000 - $3,200 = $12,800. Interest for the first period is $12,800 * 4% = $512. The result is negative because you pay the interest.
Returns $-384. At the start of the second period you repay another $3,200 of capital, leaving an outstanding balance of $12,800 - $3,200 = $9,600. Interest for the second period is $9,600 * 4% = $384. The result is negative because you pay the interest.
Returns $-256. At the start of the third period you repay another $3,200 of capital, leaving an outstanding balance of $9,600 - $3,200 = $6,400. Interest for the third period is $6,400 * 4% = $256. The result is negative because you pay the interest.
Returns $-128. At the start of the fourth period you repay another $3,200 of capital, leaving an outstanding balance of $6,400 - $3,200 = $3,200. Interest for the fourth period is $3,200 * 4% = $128. The result is negative because you pay the interest.