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How to calculate Compound interest?

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## Compound Interest Formula in Excel

❶Zulfi, just walk it through transaction by transaction. The result should be:
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Problems with unknown interest and amount Example 1: Set up the form View the solution Example 2: Set up the form View the solution Problems with unknown principal Example 3: Set up the form View the solution Example 4: Set up the form View the solution Problems with unknown interest rate Example 5: Set up the form View the solution Example 6: Set up the form View the solution Example with unknown time period Example 7: Set up the form View the solution.

Banks typically don't pay you all the interest at the end of the year, like in the example above. Instead, many pay monthly. In that case, divide the interest rate r by 12, but multiply the number of years n by 12 to convert to months. But, do banks pay you based on how much you have in your account at the end of each month?

Instead many use the average daily balance and then pay you once per month. It is common to use calculate interest with what's called continuous interest. These should be entered as follows: An investment should be entered as a positive number while a loan amount should be entered as a negative number using a "-" sign. If you regularly add an amount to your investment or pay down your loan at regular intervals, input the amount paid each time as a positive number.

This is the time period you are looking at in years. This can also be the life of your loan. Input the interest rate your investment earns or the amount you pay on your loans. This is the annual rate. Input 1 for annual compounding, 2 for semiannual, 4 for quarterly, or 12 for monthly, depending on how your investment or loan compounds. This information should be available on an investment prospectus or loan document.

Calculate compound interest earned on investments. To calculate interest earned on investments, start by inputting the amount that you initially invested. Be sure to include any payments you make on a monthly basis in the "monthly addition" box.

Then, enter the number of years you want to track investment growth over. Next, input your interest rate. This can be an expected interest rate if you are unsure. Finally, input how many times your investment interest is compounded each year. You can play around with these variables and use them to compare different investment opportunities or different interest rates and compounding frequencies.

Calculate compound interest charged on loans. Because this is technically an investment calculator, finding interest on loans is a bit different. First, you'll have to enter the principal on the loan as a negative number. This lets the calculator know that you owe the money instead of owning it. For monthly addition, input how much you are able to pay down the loan each month. This can be a minimum payment, a budgeted amount, or any other amount that you can pay each month.

Input the rest of the variables as normal. If your result is negative, you will still owe money at the end of the timeframe. However, a positive number reflect that you can pay off the loan in this way by the end of the period.

You can also use this calculator and some guesswork to determine the right monthly payments for you. You want to pay off the card in two years, but don't know how much to pay each month to do.

Start by guessing a proper monthly payment. Continue this process until you arrive at an approximate monthly payment that suits your needs. Calculate annual compound interest on an investment.

Example: Suppose you give \$ to a bank which pays you 10% compound interest at the end of every year. After one year you will have \$ + 10% = \$, and after two years you will have \$ + 10% = \$ Click here to view some problem which can be solved by using this calculator.

Compound interest and patience are! This page will show you how your money can grow over time with compound interest. Simply fill in the blanks to .

P is the present value, or how much you have saved right now. r is the interest rate, expressed as a decimal for 5%, for 12% etc). n is the number of years the money will earn interest. Banks typically don't pay you all the interest at the end of the year, like in the example above. Instead, many pay monthly. Aug 01, · How to Calculate Compound Interest Three Parts: Finding Annual Compound Interest Calculating Compound Interest on Investments Calculating Compound Interest With Regular Payments Community Q&A Compound interest is distinct from simple interest in that interest is earned both on the original investment (the principal) 68%(41).

Oct 16, · For Amy, in this word problem, just use the simple interest formula and add the interest to the principal. Use the compound interest formula for Bob. You are trying to force the compound interest formula on Amy when there is no compounding. For Amy P=, R, T=1. A compound interest calculation is a geometric series because there is a constant ratio between successive terms. Calculations: A = P*(1 + r)^t A = final balance in the savings account P = principle (the initial deposit in the bank) r = decimal form of annual interest rate t = time in years P = $ r (this is the decimal form of 5%.