DW Faisalabad New Version

DW Faisalabad New Version
Please Jump to New Version
  • Working with Tables
  • While there are four types of database objects in Access, tables are arguably the most ... read more

    Saturday, 1 July 2017

    Compound Interest

    What's compound interest and what's the formula for compound interest in Excel? This example gives you the answers to these questions.

    1. Assume you put $100 into a bank. How much will your investment be worth after one year at an annual interest rate of 8%? The answer is $108.



    2. Now this interest ($8) will also earn interest (compound interest) next year. How much will your investment be worth after two years at an annual interest rate of 8%? The answer is $116.64.



    3. How much will your investment be worth after 5 years? Simply drag the formula down to cell A6.



    The answer is $146.93.

    4. All we did was multiplying 100 by 1.08, 5 times. So we can also directly calculate the value of the investment after 5 years.



    which is the same as:



    Note: there is no special function for compound interest in Excel. However, you can easily create a compound interest calculator to compare different rates and different durations.

    5. Assume you put $10,000 into a bank. How much will your investment be worth after 10 years at an annual interest rate of 5% compounded monthly? The answer is $16,470.



    6. Assume you put $10,000 into a bank. How much will your investment be worth after 15 years at an annual interest rate of 4% compounded quarterly? The answer is $18,167.

    .