Compound Interest Table: Know The Outcome Of An Investment

The compound interest table is made, again, with the use of the ever accommodating program known as MS Excel

. However, with the MS Excel, one is still able to make a compound interest table from paper, pen and ruler. This is the method used before there were computers. Can you imagine, banks creating a complex compound interest table manually!? That would take up a lot of time and effort. You do not have to worry anymore. We have the MS Excel to help us create the best compound interest table that we need without wasting another paper, time, and ink. It the program can even save us from the hassles of making complex computations in making the table.

Today, there are downloadable tables with the concept of interest compounding. One thing to do is conduct a research online to get the compound interest table that is best suitable for your situation. These tables are created for the purpose of making it easier to compute using the compound interest formula. A compound interest table has main elements such as the rate of interest and the periods wherein the interest gets compounded. These are elements that play a big part in compound interest itself.

Why Are People Investing Time And Effort To Make A Compound Interest Table?

A compound interest table is worth a fortune if done correctly with respect to the concept of compound interest. The compound interest means that your principal will gain interest. The interest is then added to the principal and will be the new amount for the principal. The cycle will go on until the given date. In short, a compound interest gains money over and over with just a single deposited amount. How much more money can a person have, if he or she will deposit more than once!? The answer to that question can be answered by a compound interest table.

Here, is a reasonable scenario to use in making a compound interest table:

You want to make money with a one-time deposit in a bank. So, you thought of investing a hundred dollars in a bank that is willing to give you a yearly interest rate of ten percent. After a year, your hundred dollars will gain the ten percent which is ten dollars. This is then added to your first deposited amount which is a hundred dollars. Your total amount will then be a hundred and ten dollars without doing anything.

Now, how is compound interest better than a basic interest concept? You will see the results when you invest on a second year. With just mere interest, what will happen is you will gain another ten percent from the new principal amount. This will give you a return of a hundred and twenty dollars. With compound interest, you will have a return of a hundred and twenty-one dollars. Since we are only talking about a small amount of money, you will not clearly see the big difference. In mathematical terms, the one with the compound interest concept is larger by five percent. By leaving the money in this investment and using a compound interest table, you will see the vast difference it will make!

by: William Ava

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