Interest Earned Formula

[rray0032]

What is the formula to enter to obtain for example the yearly or monthly
interest earned on an account with an opening deposit of $1000.00 that has an
APY of 2.9% and is compounded daily with the interest credited on a monthly
basis?

[Bryan Hessey]

Try

=A1*((1+((D1)/365))^(C1))-A1
where A1 = opening balance,
D1 = interest rate
C1 = days

where C1 would be days in this month.

What is the formula to enter to obtain for example the yearly or monthly
interest earned on an account with an opening deposit of $1000.00 that has an
APY of 2.9% and is compounded daily with the interest credited on a monthly
basis?

[[email protected]]

"rray0032" wrote:
> What is the formula to enter to obtain for example
> the yearly or monthly interest earned on an account
> with an opening deposit of $1000.00 that has an APY
> of 2.9% and is compounded daily with the interest
> credited on a monthly basis?

Do you really mean APY, or is 2.9% the nominal annual
interest rate?

If it is the nominal rate, arguably the simplest formula is
one of the following, depending on the term of the savings
account:

=FV(2.9%/365, years*365,, -1000) - 1000
=FV(2.9%/365, months*30,, -1000) - 1000
=FV(2.9%/365, days,, -1000) - 1000

Note the double-comma before -1000. Also note that
the "months" formula is the least accurate, since it
assumes an average of 30 days per month (360 days
per year).

If 2.9% is truly the APY, the daily compounding factor
is already incorporated and 2.9%/365 would overstate
the daily interest rate. Replace 2.9%/365 with
RATE(365,,-1,1+2.9%).

Arguably, RATE() complication is not worth the trouble.
It makes a difference of less than $2.40 in interest over
5 years and less than $29.30 over 30 years per $1000
principle -- 1.5% to 2.2% respectively.