calculation of compound interest.

[aratrika]

can anybody please tell me the easiest way to calculate compound interest in excel. Actually i was compiling an worksheet on monthly PF contribution and interest thereof.It seems that the Interest compounded annually @ 8% P.A.which is credited at the end of each financial year.Hope some body will be kind enough to reply at the earliest.


Thanks & regards


Aratrika

 

[Luke M]

I believe you want the FV function. Note that it's structure is:

[pre]

FV(rate,nper,pmt,pv,type)

[/pre]
Where rate is the rate per period

Let say you have a 12% annual rate, but interest gets added monthly, you're starting with $1000, and every month you add $100, and you want to do this for 5 years (12 months * 5 yrs = 60).

Formula would be:

=FV(12%/12,60,-100,-1000)


Be sure to check out the XL help file for more info.

 

[SirJB7]

Hi, aratrika!

A formula like this will works too:

=A1*POWER(1+B1,C1)

where A1 is the initial amount, B1 the interest rate, and C1 the number of periods.

Regards!