Microsoft Office Tutorials and References
In Depth Information
At the end of the 12-month term, the CD balance is $1,030.42. In other words, monthly compounding results in
an additional $0.42 (compared with simple interest).
You can use the FV (future value) function to calculate the final investment amount without using a series of
formulas. Figure 11-9 shows a worksheet set up to calculate compound interest. Cell B6 is an input cell that
holds the number of compounding periods per year. For monthly compounding, the value in B6 would be 12.
For quarterly compounding, the value would be 4. For daily compounding, the value would be 365. Cell B7
holds the term of the investment expressed in years.
Figure 11-8: Using a series of formulas to calculate compound interest.