## Explanation

The general formula for simple interest is:

```
interest=principal*rate*term
```

So, using cell references, we have:

```
=C5*C7*C6
=1000*10*0.05
=500
```

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 means that interest payments are not compounded – the interest is applied to the principal only.

In the example shown, the formula in C8 is:

```
=C5*C7*C6
```

`interest=principal*rate*term`

The general formula for simple interest is:

```
interest=principal*rate*term
```

So, using cell references, we have:

```
=C5*C7*C6
=1000*10*0.05
=500
```

Compound interest is a financial concept that describes how an initial investment grows over time, taking into account not only the interest earned on the initial amount but also the interest earned on the interest itself. Compound interest allows your money to grow exponentially, which makes it a...

If you have an annual interest rate, and a starting balance you can calculate interest with: =balance * rate and the ending balance with: =balance+(balance*rate) So, for each period in the example, we use this formula copied down the table: =C5+(C5*rate) With the FV function The FV function can...

Author

Hi - I'm Dave Bruns, and I run Exceljet with my wife, Lisa. Our goal is to help you work faster in Excel. We create short videos, and clear examples of formulas, functions, pivot tables, conditional formatting, and charts.

The tips you provided in the Troubleshooting paragraph of the Conditional formatting page were exactly what I needed to make this work. Thanks! And have fun biking!

Paco

Learn Excel with high quality video training. Our videos are quick, clean, and to the point, so you can learn Excel in less time, and easily review key topics when needed. Each video comes with its own practice worksheet.

View Paid Training & Bundles