Calculate Compound Interest Using Excel | Learn Excel Formulas


welcome to Techybites, we teach
you how to use windows office programs today were calculating compound interest
using excel So before we get started we’re gonna talk
about some of the variables using in this formulas. First is our principal amount or present
value and we gonna call that (PV) next we have our interest (X) percent per
annum and we call that (R) Total period in years is gonna be (n) yearns so let’s get into the methods
conpounding We got Yearly, half yearly, quarterly and monthly like i
said before the formulas for the compound interest
vary from method to method for yearly we have CI=(PV(1+r/100)n)-PV we have CI=(PV(1+r/100)n)-PV we have CI=(PV(1+r/100)n)-PV for half yearly CI=(PV(1+r/2/100)2n)-PV for half yearly CI=(PV(1+r/2/100)2n)-PV for half yearly CI=(PV(1+r/2/100)2n)-PV for half yearly CI=(PV(1+r/2/100)2n)-PV similarly for quarterly we have for half yearly CI=(PV(1+r/4/100)4n)-PV for half yearly CI=(PV(1+r/4/100)4n)-PV for half yearly CI=(PV(1+r/4/100)4n)-PV and finally for monthly as there are 12 months in a year CI=(PV(1+r/12/100)12n)-PV CI=(PV(1+r/12/100)12n)-PV CI=(PV(1+r/12/100)12n)-PV all right now that we got all of our formulas done Lets go to excel okay now in an excel let’s start with their
titles so in column A lets put Preset value (PV) lets make column B Rate (R) Rate (R) lets make column C are Period (n) and Lets make column D are Yearly compounded interest Lets make column E are interest half yearly compounded Lets make column F are interest quarterly compounded Lets make column G are interest monthly compounded so now we’ve got a title done we can
actually start calculating so let’s put in PV are present value are lets say five
thousand rate let’s make it 10.5 percent per
annum lets make the period 3 years now its time to get the formula so we saw that the formula was after three years we get one thousand seven hundred and forty six point one six as our compounded interest now lets do our half yearly compounded interest so referring to our formula again we can see that quarterly compounded we
have one thousand eight hundred and twenty three point five one as our compound interest of the three
years finally let’s do our monthly compounded
interest if we compound monthly right now looks go ahead and make a chart so as you can see from the chart the more frequently we compound our interest the
more money will have at the end there’s a lot of applications to
compound interest including but not limited to credit
cards loans or any other bank dealings so it’s important to know your compound
interest and how it’s calculated

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