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A method to estimate characteristics of interior permanent magnet motors considering effects of iron loss is introduced. The equivalent circuit parameters including the iron loss resistance are calculated as functions of d-q axis currents by the finite-element method with the consideration of movement of the rotor. The characteristics of the motor are calculated from the equivalent circuit. By using this procedure, we can calculate the torque and the efficiency of the motor considering the harmonic iron losses of both the stator and rotor at any operating conditions instantaneously after parameter calculation. The results of the calculated characteristics are compared with the experimental results to examine the validity.