For this example, we want to calculate the interest paid during each year in a 5-year loan of $30,000 with an interest rate of 5%. To do this, we set up CUMIPMT like this:
- rate - The interest rate per period. We divide 5% by 12 because 5% represents annual interest.
- nper - the total number of payment periods for the loan, 60.
- pv - The present value, or total value of all payments now, 30000.
- start_period - the starting period for a given year.
- end_period - the ending period for a given year.
In the range F5:F9, here are the formulas used:
=CUMIPMT(5%/12,60,30000,1,12,0) // year 1 =CUMIPMT(5%/12,60,30000,13,24,0) // year 2 =CUMIPMT(5%/12,60,30000,25,36,0) // year 3 =CUMIPMT(5%/12,60,30000,37,48,0) // year 4 =CUMIPMT(5%/12,60,30000,49,60,0) // year 5
Note many values could be picked up directly with cell references, but are hardcoded in this example for readability.
In this example, we are calculating interest by year, so periods are set up accordingly. However, you can adjust periods to calculate interest in any timeframe desired.