I need to know if I deposit a fix amount (i.e. $10,000) at a fixed interest
rate (i.e.5%)
what is the compound interest at the end of the year. Need one formula in
one cell not a schedule by month
I need to know if I deposit a fix amount (i.e. $10,000) at a fixed interest
rate (i.e.5%)
what is the compound interest at the end of the year. Need one formula in
one cell not a schedule by month
Assuming you mean "monthly compounding".
=(1+0.05/12)^12*10000-10000
= $511.62
Don Pistulka
"Usedtobesmart" <[email protected]> wrote in message
news:[email protected]...
>I need to know if I deposit a fix amount (i.e. $10,000) at a fixed interest
> rate (i.e.5%)
> what is the compound interest at the end of the year. Need one formula in
> one cell not a schedule by month
If you want to see the amount for any particular period you can also use the
CUMIPMT and CUMPRINC functions (look at
http://www.auditexcel.co.za/financial.html to see how to use them)
"Usedtobesmart" wrote:
> I need to know if I deposit a fix amount (i.e. $10,000) at a fixed interest
> rate (i.e.5%)
> what is the compound interest at the end of the year. Need one formula in
> one cell not a schedule by month
As soon as you say "compound", it implies more than once per year. This covers any number of compounds for a year:
Total SUM = Deposit *( 1 + i/n)^(n*N)
where Total Sum is the resulting amount after investing the initial Deposit at your nominal interest rate, i (expressed in decimal form, your 10% =0.10), and compounding it n times per year for N years. As you see, as n gets larger,e.g. semi-annual, n=2, quarterly, n=4, monthly, n=12, etc., then Total SUM approaches an upper limit. If you want continuous compounding where n approaches infinity (wouldn't we all love this on our bank accounts), then
Total SUM = Deposit * EXP^(i*N)
In reality, for small amounts of Deposit, daily compounding with n=365 is very close to the upper limit. so we're not so bad off after all. The above is easily expressable in Excel.
I hope this helps. GeorgeF
Last edited by GeorgeF; 07-27-2005 at 03:58 PM. Reason: a definition was left out; haste makes waste
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