Compound interest is defined as “the interest on savings calculated on both the initial principal and the accumulated interest from previous periods.” Classically, known as “interest on interest”, this is the most common type interest used in every day finance situations.
To calculate compound interest
- on principal amount P
- at the rate of interest R
- for the number of years N
- and compounded T times per year
- we can use the formula = P*(1+R/T)^(N*T)
In this article, let me explain the necessary Excel formulas to calculate compound interest using your data.
In this Article
Compound Interest Excel Formula
Let’s say you borrow $5,000 at 5% interest rate for 10 years. The compounded value at the end of 10 years can be calculated with below Excel formula.
- Cell D4 has principal value: $5000
- Cell D5 has interest rate: 5%
- Cell D6 has years: 10
=D4*(1+D5)^D6
We can also calculate just the interest portion with this formula:
=D4*(1+D5)^D6 - D4
Compounding Once per Month
or 'T' Times per Year
It is common for compounding to be done more than once per year. In such cases, you can use below Excel formula logic to calculate the compound interest.
Below example shows compounding 4 times per year (ie, once every quarter).
' D20 has Principal Amount
' D21 has Rate of Interest
' D23 has number of years
' D24 has compounding terms per years
=D20*(1+D21/D23)^(D22*D23)
Compounding Every 'x' Months
If you want to calculate the effect of compounding every ‘x’ months, you can just below logic.
' D34 has Principal Amount
' D35 has Rate of Interest
' D36 has number of years
' D37 has number of months per compounding
=D34*(1+D35*D37/12)^(D36*12/D37)
Calculating Compound Interest with FV Function
Instead of using the P*(1+R/T)^(N*T) formula, you can use the FV () function (Future Value) to calculate the compounded value over time.
Here are a few examples:
$5000, 5%, 10 years, compounding once per year
'FV Syntax: FV(Interest Rate per term, Number of terms, , Principal Amount)
=FV(5%, 10,, -5000)
Output: $8144.47
$5000, 5%, 10 years, compounding 4 times per year
=FV(5%/4, 10*4,, -5000)
Output: $8218.10
$5000, 5%, 10 years, compounding x times per year
'Cell A1 has the Compounding Terms x
=FV(5%/A1, 10*A1,, -5000)
Compound vs. Simple Interest
Simple interest is defined as Principal x Interest Rate. It doesn’t change over time.
On the other hand, Compound Interest changes over time, as we calculate interest ON interest too.
Here is a quick demo of how Simple & Compound Interests compare over 20 years time, for $5,000 borrowed at 5% rate of interest.
'SIMPLE INTEREST FORMULA
=Principal * Rate_of_INTEREST
'COMPOUND INTEREST FORMULA
=Principal * (1 + Rate_of_INTEREST)^number_of_YEARS
Compounding Effect
“Compounding Effect” or that rapid growth of money over time often surprises people.
Imagine investing $5,000 at 5%, compounded annually for 20 years. Below table shows the effect of compounding on your money.
To calculate compounded value for various years, we can use below formulas.
'LIST OF 20 YEARS
=SEQUENCE(20)
'COMPOUNDED VALUE AT THE END OF EACH YEAR
'Amount is $5000, Rate of interest is 5%
=5000 * (1+5%)^SEQUENCE(20)
The compounding effect is starkly visible in the below graph.
Effect of Frequency on Compounding
You might think how often we compound would have an impact on the final value. But it does little.
For example, if we compare the outputs of $5,000 compounded at 5% at various frequencies, at the end of 20 years, the values would be:
- Once a year compounding: $13,266.49
- Twice a year: $13,452.32
- 4 Times a year: 13,507.42
- 6 Times a year: $13,535.21
- Every month (12 times): $13,563.20
- Every week (52 times): $13,584.88
- Every day (365 times): $13,590.48
The value hardly changes.
Below table shows how this looks over various time periods.
Interest Rate vs. Compounding
Interest rate on the other hand has a dramatic effect on the result of compounding.
For example, $5000 invested at 8% will be almost $11 million in a century!
Compounding is CRAZY!!!
$5,000 invested today at 1% interest would be worth $13,500 in 100 years.
Same money, but invested at 8% would be a whopping $10.9 million!
We can see the dramatic impact of rising interest rates on the compounded value with this table.
'Compounded value at various interest rates
'List of interest rates upto 20%
=SEQUENCE(20)/100
'COMPOUNDED VALUE AT VARIOUS RATES
'Amount is $5000, Duration is 20 years
'Compounded once per year
=5000 * (1+SEQUENCE(20)/100) ^ 20
Interest Rate vs. Compounding Graph
Effect of Compounding with Regular Payments
We can use Excel to figure out the compounded value with regular payments easily.
For example, if you invest
- $500 every month
- at 8%
- for 20 years
the final amount will be $294,510.21
To calculate this you can use the FV function, as shown below:
'FV Function Syntax
=FV(INTEREST_RATE, NUMBER_OF_PAYMENTS, PAYMENT_AMOUNT)
'Example with $500 monthly payment for 20 years at 8%
=FV(8%/12, 20 * 12, 500)
'OUTPUT
=$294,510.21
Here you can see the calculations and yearly balances for such regular (monthly) investments.
Rule of 72: Time to Double
A common thumb rule used in compounding is rule of 72.
RULE OF 72
To find out how long it takes for your money to double, divide 72 with rate of interest.
For example, at 8% interest rate, your money will double in 72/8 = 9 years.
You can use this when you don’t have the luxury of Excel or a calculator nearby to quickly calculate how long it takes for your money to double.
But what if I want to calculate the EXACT time it takes?
In such cases, you can use the formula =LOG(2) / LOG(1+Rate of Interest).
'Time to Double
'Exact formula
=LOG(2) / LOG(1+Rate_of_Interest)
'Approximate formula
=72/(Rate_of_Interest*100)
'Example at 8%
=LOG(2) / LOG(1+8%)
=9.01
=72 / (8% *100)
=9
In below example, you can see the rapid decrease in time it takes to double as the interest rate (rate of return) goes up.
Reverse of Compounding - The PV Function
We can use the PV (Present Value) function in Excel to calculate the principal value, given a compounded value.
For example, you want to save $100,000 for your daughter’s wedding, which you expect to be in 20 years. You expect the rate of interest to be 5%.
You want to know how much to save now to get $100k after 20 years.
Using the PV function as below, we can get that result.
'Reverse of Compounding
'Using PV Function to calculat the initial amount
'FUTURE AMOUNT = $100,000
'INTEREST RATE = 5%
'DURATION = 20 YEARS
'COMPOUNDING ANNUALLY
=PV(5%, 20,,-100,000)
=$37,688.95
Reverse of Regular Compounding - PMT Function
And we can use the PMT function to calculate reverse of the regular compounding.
Going back to the “saving for daughter’s wedding” case, you want to save up $100k for your daughter’s wedding in 20 years. You expect the interest rate to be 5%.
How much should you save every year?
or every month?
We can use the PMT function to figure out the regular amounts.
'Reverse of Compounding with Regular Payments
'Using PMT Function to calculat the regular payments from end value
'FUTURE AMOUNT = $100,000
'INTEREST RATE = 5%
'DURATION = 20 YEARS
'COMPOUNDING ANNUALLY
=PMT(5%, 20,,, -100000)
=$3,024.26
Compound Interest in Excel - VIDEO
Need to understand these formulas better?
Check out my quick and to-the-point video on Calculating Compound Interest in Excel.
Example Workbook with Compound Interest Calculations
I made an Excel file with over 20 examples (and more than 100 formulas). Click here to download the file and learn the concepts better.
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28 Responses to “2010 Calendar – Excel Template [Downloads]”
[...] Download and print the calendars today. You can add notes to individual dates or complete … [...] Uni Ego / Free 2010 Calendar – Download and Print Year 2010 Calendar today [...]
Any chance on a 2016 calendar?
Afternoon,
I have one similar calander that I added conditional formatting to so that I could highlight any planned factory holidays. I think i "borrowed" the formula from another calander so I won't post it here.
I also added week numbers to it using the formula =WEEKNUM(MAX(C6:I6)) Where C6:I6 is the range of dates in that give week. It works fine on most of the months but return strange values on other months (Week 6 in October?) I can't see any logic behind why it does this.
Any suggestions for an alternative formula to give the week numbers?
Regards,
William
Hi Chandoo,
I've added a new feature on your spreadsheet.
This control can be useful for all the sheets where you need to check dates.
Cheers
http://cid-69a78592a23a8438.skydrive.live.com/self.aspx/.Public/2010-calendar%5E_Miguel.xls
Hi Chandoo,
Nice calendar.
Till now whichever calendar I saw in Excel, it contained only the outline sheet.
Good to see monthly views and the mini view too.
Liked the mini view much. 🙂
-Nimesh
@William: This weeknum may be because the input dates to max are not properly formatting as excel dates.
Good tip on the conditional formatting and holidays btw...
@Migueal: Now that is super awesome. This is the reason why I love to blog. Readers will always one up me with such cool alternatives. Thank you for sharing this with us.
@Nimesh: You are welcome 🙂
is it possible to get the Notes section on the outline page to display the notes added to the month page for a specific date?
So if you add thing for January 2nd, and then select January 2nd those notes appear on the outline page
@Shish... You can do that using some formula magic. I would not recommend pushing excel to that as outlook / google calendar / icalc etc. do exactly that much more elegantly.
[...] Perpetual Excel Calendar – Free Downloadable Template [...]
Happy christmas to all of you!
This is really awesome. The nicest calender I've seen for Excel. I also like Miguels version of the sheet.
Just one "feature" is missing to me. As I live in Germany - where weeks start on Monday - I'd like to change this. Could someone please give me a hint how to do this?
Thanks in advance
Jörg
Hi Chandoo, I’ve added some new features on your spreadsheet with your permission.
Check it here:
http://cid-6b219f16da7128e3.skydrive.live.com/self.aspx/.Public/Calendar%5E_Pedro.xlsm
Miguel, this calendar is translated to Spanish language.
Jörg, this new approach allows us to start weeks on Monday.
Also it's possible to start weeks on Sunday if you enable Excel macros and push the arrows.
Best Regards,
Pedro.
@Pedro.. superb stuff.. thanks for sharing the file with all of us.
Hi Chandoo, for dates before March 1, 1900 our calendars are wrong.
In Microsoft Excel, DATE, EOMONTH, WEEKDAY functions return an incorrect result between Monday, January 1, 1900 and Wednesday, February 28, 1900.
See this page: http://support.microsoft.com/kb/214326/en-us/
Microsoft Excel incorrectly assumes that the year 1900 is a leap year in all Excel versions.
That's the reason why our calendar versions only work from March, 1, 1900 until December, 31, 9999.
Your comments are welcome.
Pedro.
@Pedro.. Thanks for pointing that out. wow... This reminds me of the Joel Spolsky's first BillG review - http://www.joelonsoftware.com/items/2006/06/16.html (read it, I am sure you would love it.) when Bill out of blue asks about date time implementations for VBA (which Joel is the program manager for...)
Thanks for sharing the URL too... Here is a specially made, chocolate sprinkled, extra fluffy donut for you 🙂
Hi Chandoo, thanks a lot for the donut but I prefer it without chocolate!
Always it's good to know a little history of Excel.
The Joel Spolsky’s last BillG Excel review was about the "Hall of Tortured Souls"
(See this Excel 95 Easter Egg here: http://www.eeggs.com/items/719.html)
Do not miss the humor!
@Chandoo.. I just return with a new calendar version.
http://cid-6b219f16da7128e3.skydrive.live.com/self.aspx/.Public/calendar-pedrowave.xltx
It helped me to practice conditional formatting, formulas to show check boxes, data validation drop down list, find out Thanksgiving Day's date for any year, how to find dates of public holidays using Excel, all reading your wonderful posts!
Perpetual Calendar Spanish version starting weeks on Monday:
http://cid-6b219f16da7128e3.skydrive.live.com/self.aspx/.Public/calendario-pedrowave.xltx
Main characteristics:
- Not macros.
- Select a year from 1900 to 9999 with a dropdown listbox.
- All date fields with the real date format.
- Easy language change of day of the week and month names because are also dates.
- Hide Saturdays and/or Sundays.
- Week starting on Sunday or Monday.
- Week and month numbers.
- Hyperlink between sheets.
- Consistent colors to Holidays, Diary and Events dates.
- Easy change of Holidays by country.
- Include 80 World Days and you can add more.
- A diary with my birthday and 50 more programable appointments.
- Check box to hide individual dates or all.
- Holidays, diary and events text are showed on each month's sheet.
- Ranges defined with Name Manager variables.
I'll appreciate if you make me some suggestions to improve this calendar.
Pedro.
Please, I need help!
I like all calendar from Pedro, thank you for them. Let me show my problem:
I have 2 excel cells (for example AE12 and AE13) which mean the starting and the ending date of my duty. I need a macro to insert sheets with label YEAR. MONTH (for example 2010. August or similar) with the proper datas between the two dates. Is it possible?
Thank you for reading me and sorry about my terribel english! 🙂
Hello Pedro,
Thanks so much for the modified calendar template. I love the extra functionality you added. Is there any way you could upload an unlocked version? I wanted to change some of the comments and data validation so I could use it for one of my applications.
As for feedback on potential improvements, with all the additions you made the file runs pretty slow. I'm sure this has to do with all the interconnectivity between the various tabs, but if there is a way to use less memory via more efficient formulas or something else I think this would make it easier to use. I have a brand new computer and with it running alone the response was pretty slow. One of the changes I'm making is changing the order of the months to match my company's fiscal year, so maybe something to automate a change like that could be useful.
Cheers,
Peter
Peter, my calendars are unlocked but you need Excel 2007 and 2010 versions to open them.
Now I return with a new Programmable Task Calendar:
http://cid-6b219f16da7128e3.office.live.com/view.aspx/.Public/Calendario%20de%20Tareas.xlsx
Wath an introductory video here:
http://pedrowave.blogspot.com/2010/10/programmable-task-calendar.html
This new calendar allows to select the start month to match the school and fiscal year.
This is great stuff Chandoo and company
Wanted to know if someone had built something similar
I need to store one Excel Sheet on this calendar that has all the holidays
US Holidays appear in RED
UK Holidays appear in Blue
Meetings appear in Green
Submissions appear in Orange
Is there a way I can store the list in a separate worksheet and all the calendars get updated with this?
Thanks
[...] Calendars: Year 2010 Excel Calendar | Year 2009 Excel [...]
please tell me "how to convert Rs.10000/- in to words through excel formula
[...] is all! http://chandoo.org/wp/2009/12/11/2010-calendar-excel-template-downloads/ See more Templates at http://www.vertex42.com/ Share this:Like this:LikeBe the first to like this [...]
Greetings,
Thanks for this wonderful excel vacation tracker. I notice that the tracker only has three months November, December and January 2015, however, I would like to add the other ten months for 2014. Can you please instruct me on how I can add the other months?
Thanking you in advance.
Hi Chandoo,
Calendar: can this be printed as single sheet 8.5x11 inch per month
kanu
@Kanu
Yes,
You can resize it to fit
WOW! I just searching some of like this, that help me.
Thank you for sharing.