Microsoft Excel is an ideal tool for calculating the cost of borrowing money, but are you doing so in the most efficient manner? In this article, I'll describe how you can use the CUMIPMT function to calculate interest expense for a loan, whether for a month, a year, or the length of the loan - all within a single worksheet cell. I'll also show you how to add an amortization schedule to any workbook with just a couple of mouse clicks.
Before I describe the CUMIPMT function, let's first take a look at the PMT function, which calculates the payment amount for a loan. PMT has 3 required and 2 optional arguments: