Rate
The interest rate per period.
NumberOfPeriods
The total number of payment periods in the term.
PresentValue
The initial sum borrowed.
FutureValue
The cash balance to be attained at the end of the term. (With a loan, this would normally be 0.) If omitted, it is assumed to be 0.
Type
0 If payments are made at the end of each period and 1 if payments are made at the start of each period (including a payment at the start of the term). If omitted, it is assumed to be 0.
Returns
The payment per period.
Returns the fixed periodic payment for a loan or annuity at a constant interest rate. Each payment consists of an interest portion and a principal portion. Use IPMT and PPMT to break a single payment into those two components.
Examples
Returns roughly $-177.14. Consider a three-year loan of $6,000 at 4% annual interest with monthly end-of-month payments. You pay roughly $177.14 each month. The result is negative because you pay that sum.
Returns roughly $-130.52. Suppose you wish to save $5,000 over three years, making monthly deposits starting today, at 4% annual interest compounded monthly. A deposit of roughly $130.52 each month will reach the $5,000 target.
Returns roughly $-229.53. Consider a three-year loan of $6,000 at 4% annual interest with monthly end-of-month payments. In addition, you wish to accumulate a $2,000 lump sum, paid to you at the end of the term. This hypothetical example assumes that the borrowing rate and the savings rate are identical. It illustrates the sign convention: 6000 is positive because you receive the loan, 2000 is positive because you receive the lump sum, and the result is negative because you pay the monthly amount.