Microsoft Office Tutorials and References
In Depth Information
Figure 11-9: Using a single formula to calculate compound interest.
Cell B9 contains the following formula that calculates the periodic interest rate. This value is the interest rate
used for each compounding period.
=B5*(1/B6)
The formula in cell B10 uses the FV function to calculate the value of the investment at the end of the term. The
formula is
=FV(B9,B6*B7,,-B4)
The first argument for the FV function is the periodic interest rate, which is calculated in cell B9. The second
argument represents the total number of compounding periods. The third argument (pmt) is omitted, and the
fourth argument is the original investment amount (expressed as a negative value).
The total interest is calculated with a simple formula in cell B11:
=B10-B4
Another formula, in cell B13, calculates the annual yield on the investment:
=(B11/B4)/B7
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