Part 1:
The PMT Function in Excel is used to calculate the repayment of a loan. The PMT Function calculates the amount of loan repayment.
The generic formula for PMT Function is as follows:
=PMT(rate,nper, pv,[fv],[type])
Now let us understand each of the components of the PMT Function:
rate: The interest rate for the loan
per: Total number of payments of the loan repayment.
PV: Present Value of a series of Future Payments ie. the Principal of the Loan
VF: The future value of the loan or the cash balance that an individual wants to obtain after the loan is paid. This can be omitted, if omitted its value will be taken as zero ie the value of the loan in the future will be zero.
Type: The numbers 0 and 1 indicate when the payment of the loan is due. This is optional and can be omitted If it is 0 or omitted then payments are considered to be due at the end of the period(ie. end of month or quarter or end of year as the case may be). If it is 1 then payments are considered to be due at the beginning of the period((ie. beginning of month or quarter or end of the year as the case may be)
Part 2:
The Excel IPMT Function can be used to calculate the interest portion of loan repayment for a given period.
The generic formula for Excel IPMT Function is as follows:
=IPMT(rate,per,nper,pv,fv,[type])
Now let us understand each of the components of the IPMT Function:
rate: The interest rate for the loan
per: The period for which the interest payment has to be determined and should range between 1 and per
per: Total number of payments of the loan
PV: Present Value of a series of Future Payments ie. the Principal of the Loan
VF: The future value of the loan repayment or the cash balance that an individual wants to obtain after the loan is paid . This can be omitted, if omitted its value will be taken as zero ie the value of the loan in the future will be zero.
Type: The numbers 0 and 1 indicate when the loan repayment is due. This is optional and can be omitted If it is 0 or omitted then payments are considered to be due at the end of the period(ie. end of month or quarter or end of year as the case may be). If it is 1 then payments are considered to be due at the beginning of the period((ie. beginning of the month or quarter or end of the year as the case may be).
Learn more about loan repayment at
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