For this example, we want to calculate the principal portion for payment 1 of a 5-year loan of $5,000 with an interest rate of 4.5%. To do this, we set up PPMT like this:
rate - The interest rate per period. We divide the value in C6 by 12 since 4.5% represents annual interest:
per - the period we want to work with. Supplied as 1 since we are interested in the the principal amount of the first payment.
pv - The present value, or total value of all payments now. In the case of a loan, this is input as a negative value by adding a negative sign in front of C5 to supply -5000.
With these inputs, the PPMT function returns 74.465, which is rounded to $74.47 since the Currency number format is applied.