subject: Compound Interest Formula Excel For Loans And Investments [print this page] The MS excel is known to have more than fifty functions for our calculation needs. Mostly all of your financial calculations can be answered through one of its functions. However, the compound interest formula excel has a different function that we need to do manually. Since it is a compound interest formula excel, it has a complex formula that none of the functions in excel have.
Where Can We Use The Compound Interest Formula Excel?
The compound interest formula excel can be of big help when you want to be enrolled or currently enrolled in a loan, a mortgage, a debt, even in investments. Basically, the compound interest formula excel can help you in any financial situation that includes interest compounding for more than one time. The usual financial situation is wherein both the original amount and the interest are getting payments or profits. With the compound interest formula excel, you will not have to worry about manual computations.
What if you have a certain amount of money that you want to put in a time deposit account? If you are having second thoughts on doing this for the sake of the profit that you will make, then worry not. With the compound interest formula excel, you will be able to know the total profits that you will make. All you need is the number of years of the investment and the interest rate that will be compounded to your account every month.
The compound interest formula excel may have different types of compounding. It may be monthly or quarterly or even weekly to daily. This depends on the loan or investment terms that you are in. So be sure that when using the compound interest formula excel, you are inputting the right amount to each asked variable.
The compound interest formula excel is made up of a certain compound interest formula.
A = P (1 + r/n)nt
A is the total cash amount that you will get as a profit in an investment. With a loan, this will be the total amount that you have to pay in order to repay a debt.
P is the original amount of your investments or your loan. This can also be called as a principal amount.
r is the rate of interest for both investment or loan. For accuracy in calculations, this variable should be in decimal form. It is usually given by your monetary organization in percent form.
n is the number of times that your interest has been or will be compounded in a year.
t is the number of years that you have for your investment or loan.
With the compound interest formula excel, you will have an advantage in both loans and investments.
