The **calculation of Interest During Construction** is different from normal Interest. If you are looking for a way to calculate the interest during your construction period then this article will be helpful for you. The objective of this article is to explain the **calculation of Interest During Construction** in Excel.

**Table of Contents**hide

## Download Practice Workbook

You can download the practice workbook from here.

## What Is Interest During Construction?

**Interest During Construction** is the interest that is applied in the construction period. It is calculated on the **debt** for the project. You will need to know the **debt**, the **interest rate**, and some other variables to calculate **Interest During Construction**.

## Step by Step Calculation of Interest During Construction in Excel

Here, I have taken the following dataset to explain this article. The** Start Date** and the** End Date **of the construction period are given. The annual **Interest Rate** is** 8%**. And the **Debt** in **Year 1** is **$88,500** and in **Year 2 **is **$90,550**. Now, I will show you the **calculation of the Interest During Construction **in Excel. Let’s see the steps.

### Step-01: Select Drawdown Mode and Frequency

In this first step, I will show you how you can select the **Drawdown Mode** and the **Drawdown Frequency **in a dynamic way.

- First, create a section for entering the
**Drawdown Mode**and**Drawdown Frequency**.

- Next, select the cell where you want to show the
**Drawdown Mode**. Here, I selected cell**C12**. - Then, go to the
**Data**tab. - Afterward, select
**Data Validation**.

- Consequently, the
**Data Validation**dialog box will appear. - Select the
**Settings**tab. - Then,
**Click**on the drop-down button for**Allow**from**Validation criteria**. - After that, select
**List**.

- Then, write the options you want in the
**Source**section. - Finally, select
**OK**.

- Next, you will see a drop-down button has been inserted in your selected cell which is cell
**C12**.

- To select
**Drawdown Mode**, firstly**Click**on the drop-down button. - Then, select the mode you want. Here, I selected
**Quarterly**.

- After that, you will see that
**Quarterly**is showing as**Drawdown Mode**.

- Next, select the cell where you want to show the
**Drawdown Frequency**. Here, I selected cell**C13**. - Then, in cell
**C13**write the following formula.

`=IF(C12="Annually",12,IF(C12="Half Yearly",6,3))`

- Finally, press
**Enter**and you will get your**Drawdown Frequency**.

**🔎** **How Does the Formula Work?**

**IF(C12=”Half Yearly”,6,3):**Here,**the IF function**returns**6**if the**logical_test**is**True**. Otherwise, it returns**3**.**IF(C12=”Annually”,12,IF(C12=”Half Yearly”,6,3)):**Now, the**IF**function returns**12**if the**logical_test**is**True**. Otherwise, it will go to the next**IF**function.

### Step-02: Create Table for Interest During Construction

Now, I will create a table where I will calculate everything I need for the** Calculation of Interest** **During Construction** in Excel.

- In the beginning, create a table with
**4**columns. - Then, name the columns as
**Date**,**Drawdown Amount**,**Cumulative Amount**, and**Interest**.

**Read More:** **How to Calculate Interest on a Loan in Excel (5 Methods)**

### Step-03: Insert Dates into Table

Here, I will insert the **Dates** for every drawdown period for the project.

- Firstly, select the cell where you want the first
**Date**. - Secondly, write the following formula in that selected cell.

`=C4`

- Thirdly, press
**Enter**to get the**Date**.

**C4**. in this case, it returns the

**Start Date**of the construction period.

- Afterward, select the cell where you want the second
**Date**. Here, I selected cell**B18**. - Then, in cell
**B18**write the following formula.

`=IF(B17<$C$5,EDATE(B17,$C$13),"")`

- Next, press
**Enter**to get the**Date**.

- After that, drag the
**Fill Handle**down to copy the formula to the other cells.

**🔎** **How Does the Formula Work?**

**EDATE(B17,$C$13):**In**the EDATE function**, I selected**B17**as**start_date**and**C13**as**months**. The formula will return the date after the months in cell**C13**from the date in cell**B17**.**IF(B17<$C$5,EDATE(B17,$C$13),””):**Now, the**IF**function will check if the value in cell**C5**is less than the value in cell**C5**. if the**logical_test**is**True**then the formula returns the**Date**generated by the**EDATE**function. Otherwise, it returns**blank**.

**Here, I used**

*Note:***Absolute Cell References**for the fixed values so that the formula does not change while using

**Autofill**.

- Next, you can see that I have copied the formula to the other cells and got my desired output.

- In the following image, you can see that the last date is after the
**End Date**. So, I will delete this date.

- Finally, this is how my table looks at this stage.

**Read More:**** How to Calculate Interest Between Two Dates Excel (2 Easy Ways)**

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### Step-04: Calculate Drawdown Amount

In this step, I will calculate the **Drawdown Amount** for each period. The drawdown amount refers to the amount by which an investment is down from the peak before it reaches the peak.

- First, select the cell where you want to calculate the
**Drawdown Amount**for**Year 1**. - Then, write the following code in that selected cell.

`=$C$9/(12/$C$13)`

- Next, press
**Enter**to get the result.

- Afterward, drag the
**Fill Handle**down to copy the formula to**3**more cells.

**12**is

**divided**by the value in the cell

**C13**which is the

**Drawdown Frequency**. And then, the

**Debt**in

**Year 1**is

**divided**by the result.

- Finally, you can see that I have copied the formula and got the
**Drawdown Amount**for**Year 1**.

- Next, select the cell where you want to calculate the
**Drawdown Amount**for**Year 2**. Here, I selected cell**C21**. - Then, in cell
**C21**write the following formula.

`=$C$10/(12/$C$13)`

- After that, press
**Enter**.

- Further, drag the
**Fill Handle**down to copy the formula to**3**more cells as the**Drawdown****Mode**is**Quarterly**.

**12**is divided by the value in cell

**C13**which is the

**Drawdown Frequency**. And then, the

**Debt**in

**Year 2**is divided by the result.

- Here, you can see that I have copied the formula.

### Step-05: Calculate Cumulative Amount

Now, I have reached the **5th** step of **calculation of Interest During Construction** in Excel. In this step, I will calculate the **Cumulative Amount**.

- Firstly, select the cell where you want the first
**Cumulative Amount**. Here, I selected cell**D17**. - Secondly, in cell
**D17**write the following formula.

`=C17`

- Thirdly, press
**Enter**.

**C17**.

- After that, select the cell where you want to calculate the next
**Cumulative Amount**. - Next, write the following formula in that selected cell.

`=C18+D17`

- Then, press
**Enter**.

- Afterward, drag the
**Fill Handle**down to copy the formula to the other cells.

**summation**of the values in cells

**C17**and

**D17**.

- Lastly, you can see that I have copied the formula to the other cells and got the
**Cumulative Amount**.

**Read More:** **How to Use Cumulative Interest Formula in Excel (3 Easy Ways)**

### Step-06: Determine Interest

In this step, I will show you how you can determine your** Interest**.

- In the beginning, select the cell where you want to calculate the
**Interest**. - Next, write the following formula in that selected cell.

`=D17*$C$6*($C$13/12)`

- After that, press
**Enter**.

- Then, drag the
**Fill Handle**down to copy the formula.

**Drawdown Frequency**is divided by

**12**. And then the result is

**multiplied**by the

**Interest**

**Rate**and

**Cumulative Amount**.

- Finally, you can see that I have copied the formula to the other cells and got the
**Interest**.

**Read More:** **How to Calculate Interest Rate in Excel (3 Ways)**

### Step-07: Calculating Interest During Construction in Excel

Now, I have reached the final step of my **calculation for Interest During Construction** in Excel. I will show you how you can calculate the **Interest During Construction**.

- Firstly, select the cell where you want to calculate the
**Interest During Construction**. Here, I selected cell**E26**. - Secondly, in cell
**E26**write the following formula.

`=SUM(E17:E24)`

- Finally, press
**Enter**to get the**Interest During Construction**.

**the SUM function**, I selected cell range

**E17:E24**as numbers. The formula returns the

**summation**of the cell range

**E17:E24**.

**Read More:** **Calculate Interest in Excel with Payments (3 Examples)**

### Final Output

In the following picture, you can see the final output of my calculation for** Interest During Construction **in Excel.

**Read More:** **How to Calculate Principal and Interest on a Loan in Excel**

## Conclusion

So, you have reached the end of my article. Here, I tried to cover the **calculation of Interest During Construction in Excel**. I hope it was clear to you. If you have any questions or suggestions, feel free to let me know in the comment section below.

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