Now
a days Excel is very popular and frequently people use it for calculations.
People who are familiar with EXCEL can use. PMT formula is used to know the
EMI. IPMT is used to know the interest portion in the EMI of a particular
instalment. Similarly, PPMT is used to know the principal component in the
EMI of a particular installment. We give below the details as to how to use
PMT formula in excel.

PMT
(Source : EXCEL Help File)

Calculates the payment for a loan based on constant payments and a
constant interest rate.

Syntax

PMT(rate,nper,pv,fv,type)

For a more complete description of the arguments in PMT, see the PV
function.

Rate is the interest rate for the loan.

Nper is the total number of payments for the loan.

Pv is the present value, or the total amount that a series of
future payments is worth now; also known as the principal.

Fv is the future value, or a cash balance you want to attain
after the last payment is made. If fv is omitted, it is assumed to be 0
(zero), that is, the future value of a loan is 0.

Type is the number 0 (zero) or 1 and indicates when payments
are due.

Set
type equal to

If
payments are due

0 or omitted

At the end of the period

1

At the beginning of the period

Remarks

The payment returned by PMT includes principal and
interest but no taxes, reserve payments, or fees sometimes associated
with loans.

Make sure that you are consistent about the units
you use for specifying rate and nper. If you make monthly payments on a
four-year loan at an annual interest rate of 12 percent, use 12%/12 for
rate and 4*12 for nper. If you make annual payments on the same loan,
use 12 percent for rate and 4 for nper.

Tip To find the total amount paid over the duration of the
loan, multiply the returned PMT value by nper.

.

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Example 1

The example may be easier to understand if you copy it to a blank
worksheet.

Create a blank workbook or worksheet.

Select the example in the Help topic.

Note Do not select the row or column
headers.

Selecting an example from Help

Press CTRL+C.

In the worksheet, select cell A1, and press CTRL+V.

To switch between viewing the results and viewing
the formulas that return the results, press CTRL+` (grave accent), or on
the
Tools menu, point to
Formula Auditing, and then click
Formula Auditing Mode.

1

2

3

4

A

B

Data

Description

8%

Annual interest rate

10

Number of months of payments

10000

Amount of loan

Formula

Description (Result)

=PMT(A2/12, A3, A4)

Monthly payment for a loan with the above
terms (-1,037.03)

=PMT(A2/12, A3, A4, 0, 1)

Monthly payment for a loan with the above
terms, except payments are due at the beginning of the period
(-1,030.16)

Example 2

You can use PMT to determine payments to annuities other than loans.

The example may be easier to understand if you copy it to a blank
worksheet.

In the worksheet, select cell A1, and press CTRL+V.

To switch between viewing the results and viewing
the formulas that return the results, press CTRL+` (grave accent), or on
the
Tools menu, point to
Formula Auditing, and then click
Formula Auditing Mode.

1

2

3

4

A

B

Data

Description

6%

Annual interest rate

18

Years you plan on saving

50,000

Amount you want to have save in 18 years

Formula

Description (Result)

=PMT(A2/12, A3*12, 0, A4)

Amount to save each month to have 50,000 at
the end of 18 years (-129.08)

Note The interest rate is divided by 12 to get a monthly rate.
The number of years the money is paid out is multiplied by 12 to get the
number of payments.

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