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Ipmt function

Posted on 2016-08-20
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Last Modified: 2016-08-21
Hello,

I am interested in knowing how to enter the variables in excels ipmt function for a 41 day period if given an annual rate.
Please see attached spreadsheet.  There are some calculations for a 1 month time frame and i am interested in the 41 day period and calculating according to the ipmt function.


thank you
InterestEE.xlsx
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Question by:pdvsa
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Expert Comment

by:Menash H
ID: 41763716
heya,
its more of a financial question than an Excel one.
this furmula is calculating the spitzer loan amortisation.
with this loan type, the interest is calculated for the whole period between payment to payment.
the interest is a division of the annual interest by he number of payments in the annum.
you can calculate the first 30 days, with the formula, and then divide the additional 11 days by 30, and multiply it by the periodical interest and the residual amount due.
usually, the spitzer is accounted as a 30/360 days a month in a year.
you have to check the regional conventions and the business terms.
cheers,
Menash
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Author Comment

by:pdvsa
ID: 41763765
would you agree the formula then would be
Prin*rate*(41/360) = interest for 41 days?
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LVL 11

Expert Comment

by:Wilder1626
ID: 41763821
pdvsa

You may want to look at this link: https://web.iit.edu/sites/web/files/departments/academic-affairs/academic-resource-center/pdfs/PMT_IPMT_PPMT.pdf

This may guide you on what you are trying to do on pages 11,12 and 13 (including the cover page in the page count)
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Expert Comment

by:Menash H
ID: 41764029
maybe, but...
in terms of a loan taken on the 21/12/2016 and returned 31/12/2017, the fractional month should be calculated first, as a grace period, in which no principle payments are done, there is only the interest paid for the lot, then, run the spitzer calc and compute the returns.
the initial interest for the first 11 days is added to the loan first principle and interest payment.
again, the rules vary by the region's convention and the agreement.
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Author Comment

by:pdvsa
ID: 41764041
The names are not important to me.  My question is how to use ipmt.  Please what is your formula (not words) for such question.
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Accepted Solution

by:
Menash H earned 500 total points
ID: 41764107
you have to read the words in order to understand.
starting 21/12/16 to 31/12/216 :
29000000*1.895/12*11/30  for the interest only.
then use the pmt and ipmt for whole months,

other than that, this is not spitzer amortisation, and if its not, you cant use the ipmt in your case.
if the payment is on the 21 of each month, so on the 21/01/2017 you have paid all principle and interest, so there is 0 to calculate.
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Author Closing Comment

by:pdvsa
ID: 41764465
Thank you...
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