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ACCRINTM Function

The ACCRINTM function in Excel is used to calculate the interest accrued at maturity for a security that pays interest at maturity. This function is primarily useful in financial analysis and tracking investments that earn interest over a fixed term and pay out that interest at the maturity date.

Key Features of ACCRINTM:

  • Calculates interest accrued over the full term of a security that pays interest at maturity.
  • Helps determine the total interest to be earned on fixed-income investments.
  • Can handle securities with various day count conventions.

Syntax:

ACCRINTM(issue, maturity, rate, par, [basis])
  • issue: The issue date of the security (start date when interest begins to accrue).
  • maturity: The maturity date of the security (end date when the total interest and principal are due).
  • rate: The annual interest rate of the security.
  • par: The par value (face value) of the security. Defaults to 1,000 if omitted.
  • [basis]: (Optional) Specifies the day count basis to use. Defaults to 0. The options are:
    • 0 = US (NASD) 30/360 (default).
    • 1 = Actual/actual.
    • 2 = Actual/360.
    • 3 = Actual/365.
    • 4 = European 30/360.

How ACCRINTM Works:

  1. It calculates the interest accrued over the full term of a security from the issue date to the maturity date.
  2. Determines the interest using the rate, the par value, and the selected basis.
  3. Provides a result representing the total interest due on the maturity date.

Examples:

1. Calculate Accrued Interest with Default Basis:

=ACCRINTM(DATE(2023,1,1), DATE(2024,1,1), 0.05, 1000)

Result: Returns the interest accrued at 5% annual interest over 1 year for a security with a par value of $1,000, using the default 30/360 day count method.

2. Calculate Accrued Interest with Actual/Actual Basis:

=ACCRINTM(DATE(2023,3,1), DATE(2024,3,1), 0.06, 1500, 1)

Result: Calculates accrued interest at 6% on a par value of $1,500 using the actual/actual day count convention.

3. Accrued Interest for Less Than One Year:

=ACCRINTM(DATE(2023,6,1), DATE(2023,12,1), 0.04, 2000, 3)

Result: Calculates accrued interest over 6 months at a 4% annual rate for a $2,000 par value, following the * actual/365* basis.

Notes:

  • If any of the input values for issue, maturity, rate, or par are invalid, Excel will return a #VALUE! error.
  • Ensure that the issue date is earlier than the maturity date, or Excel will return a #NUM! error.
  • The choice of basis can significantly affect the interest calculation, especially for long-term securities.

Applications:

  • Investment Tracking: Easily calculate the total interest due upon the maturity of bonds or other securities.
  • Fixed-Income Portfolio Analysis: Helps in projecting income from securities with maturity-based interest payouts.
  • Corporate Financial Management: Useful for cash flow forecasting and tracking interest earned on long-term deposits.

Tip: Double-check all input parameters (especially dates and interest rates) to ensure calculations align with financial expectations and practices.