# Step-by-Step Guide on How to Use the CUMIPMT Function in Excel

This guide will provide a step-by-step solution on how to use the CUMIPMT function in Microsoft Excel. It’s an essential tool for developers looking to analyze the present value of cash flow in interest-bearing accounts.

## What is the CUMIPMT Function?

The CUMIPMT function is an Excel Financial function used to calculate the cumulative interest paid for a given period on a loan or investment. It takes six parameters:

1. Rate: The interest rate used to calculate interest.
2. NPer: The total number of payments in a specified period.
3. Pv: The present value of the loan or investment before interest.
4. StartPeriod: The first period in the calculation.
5. EndPeriod: The last period in the calculation.
6. Type: Payment type, either 0 (payment made at the end of the period) or 1 (payment made at the start of the period).

## How to Use the CUMIPMT Function in Excel

The CUMIPMT function in Excel is fairly straightforward, although it does contain several parameters. Here’s a step-by-step guide for using the function:

2. Enter the six parameters required for the CUMIPMT formula in the correct column.
3. Enter the formula in a cell (or press Fx) to display the result.
``````=CUMIPMT(rate, nper, pv, startperiod, endperiod, type)
``````

Note that CUMIPMT will return an error if any of the parameters are incorrect or typed in the wrong format.

## Examples of the CUMIPMT Function in Excel

Here are two examples of the CUMIPMT function in action.

### Example 1

You are evaluating the total interest paid on a loan of \$100,000 with a 10% annual interest rate over 10 years. The loan is to be paid off in 120 monthly payments. The first period is month 1 and the last period is month 120.

The formula for this example would look like this:

``````=CUMIPMT(10%, 120, 100,000, 1, 120, 0)
``````

### Example 2

You are evaluating the total interest paid on an investment of \$200,000, with a 7% annual interest rate over 5 years. The investment will be paid off in 60 bi-annual payments. The first period is month 1 and the last period is month 60.

The formula for this example would look like this:

``````=CUMIPMT(7%, 60, 200,000, 1, 60, 1)
``````

## FAQs

#### What is the CUMIPMT Function?

The CUMIPMT function is an Excel Financial function used to calculate the cumulative interest paid for a given period on a loan or investment. It takes six parameters which are rate, nper, pv, startperiod, endperiod and type.

#### How do I use the CUMIPMT Function?

To use the CUMIPMT function, open your spreadsheet in Excel, enter the parameters required and enter the formula in a cell (or press Fx) to display the result.

#### What are the parameters for the CUMIPMT Function?

The parameters for the CUMIPMT function are rate, nper, pv, startperiod, endperiod and type.

#### Are there any examples I can use?

Yes, two examples of the CUMIPMT function are provided in the guide. The first is a loan with a 10% annual interest rate over 10 years, to be paid off in 120 monthly payments. The second is an investment of \$200,000, with a 7% annual interest rate over 5 years, to be paid off in 60 bi-annual payments.

#### What does the CUMIPMT function return?

The CUMIPMT function will return the cumulative interest paid for a given period on a loan or investment.

#### What happens if I enter a wrong parameter for the CUMIPMT Function?

If you enter an incorrect parameter for the CUMIPMT function, the function will return an error.

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