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Excel FV Function for Calculating Compound Interest For monthly or yearly compounding it adds for each month and year respectively.
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This is because the 5% interest rate adds interest to the initial investment each day. The following picture shows how it is calculated.Īs you can see, while calculating the future value for the daily compounding interest with the same investment, the result is a bit higher than with monthly compounding or yearly compounding. Here the formula will be, Future Value = P*(1+r/365)^(n*365). Just like the previous examples, we can calculate the future value of the initial investment for daily contributions. The following picture shows, how the compound interest is calculated when the interest is paid quarterly.Ĭompound Interest Formula with daily Contributions in Excel Just like the previous example If the interest on investment is paid quarterly then the formula for future value becomes, Future Value = P*(1+r/4)^(n*4). The following picture shows the formula of compound interest to calculate the future value of any investment with monthly contributions.Ĭalculating Compound Interest while Interest is Paid Quarterly If the interest is paid monthly then the formula for future value becomes, Future Value = P*(1+r/12)^(n*12). The following picture shows the future value of an original investment of $100 for different years, invested at an annual interest rate of 5%.Ĭompound Interest Formula with Monthly Contributions in Excel
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Here the investment goes as the years added. The future value of some amount of investment for a number of years can be shown using the same formula. Calculating Compound Interest Over Multiple Years The below picture shows how it is done.Īs we can see the Future value is $127.63 which is the accurate value for this. We can use the formula directly to calculate the future value in excel. For this, we need to calculate the future value using the formula of compound interest. Let`s say we have a table that states $100 investment for 5 years at an annual interest rate of 5%. Here we are going to calculate the future value of some venture using the formula of compound interest in excel. Then the calculated future value is, 100*(1+5%)^5 = 127.6282 Compound Interest Formula in Excel