To calculate compound interest in Excel, you can use the FV function. This example assumes that $1000 is invested for 10 years at an annual interest rate of 5%, compounded monthly. In the example shown, the formula in C10 is:
The FV function can calculate compound interest and return the future value of an investment. To configure the function, we need to provide a rate, the number of periods, the periodic payment, the present value.
To get the rate (which is the period rate) we use the annual rate / periods, or C6/C8.
To get the number of periods (nper) we use term * periods, or C7 * C8.
There is no periodic payment, so we use zero.
By convention, the present value (pv) is input as a negative value, since the $1000 "leaves your wallet" and goes to the bank during the term.
To calculate simple interest in Excel (i.e. interest that is not compounded), you can use a formula that multiples principal, rate, and term. This example assumes that $1000 is invested for 10 years at an annual interest rate of 5%. Simple interest...
To calculate annual compound interest, you can use a formula based on the starting balance and annual interest rate. In the example shown, the formula in C6 is: = C5 + ( C5 * rate ) Note: "rate" is the named range F6. How this formula works If you...
To compare the effect of (non-annual) compounding periods on growth, you can set up a worksheet as shown, and calculate future value with the FV function . In the example shown, $1000 is invested with an annual interest rate of 5%, the formulas in...
The Excel FV function is a financial function that returns the future value of an investment. You can use the FV function to get the future value of an investment assuming periodic, constant payments with a constant interest rate.
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