If you are curious to try this advanced compound interest calculator for Excel to compute your savings, feel free to download it. Compound interest calculators online. If you prefer investing money rather than time in figuring out how to calculate compound interest in Excel, online compound interest calculators may come in handy. Interest Rate Calculator. This interest Rate Calculator will help you compute the effective interest rate based on the number of periods, type of interest rate (simple vs compound), and initial balance amount. Here is what the template looks like: Download the Free Template. Enter your name and email in the form below and download the free.
To calculate compound interest in Excel, you can use the FV function. This example assumes that $1000 is invested for 10 years at an annual interest rate of 5%, compounded monthly. In the example shown, the formula in C10 is: =. The Excel compound interest formula in cell B4 of the above spreadsheet on the right uses references to the values stored in cells B1, B2 and B3 to perform the same compound interest calculation. The formula uses cell references to calculate the future value of $100, invested for 5 years with interest paid annually at rate of 4%. Download links for Free Compound Interest Calculator 1.0. Fri February 22nd, 2019. My Watchlist Editor's Picks Sign In Submit Software Contact. Excel based utility to calculate your Networth with increasing savings. Watch My Budget Lite 2.43.0. Simply Enter only Do you want to download compound interest calculator excel download for free? 9 Apps provides a huge selection of top and free ucmobile. The tutorial explains the compound interest formula for Excel and provides examples of how to calculate the future value of the investment at annual, monthly or daily compounding interest rate. You will also find the detailed steps to create your own Excel compound interest calculator. Compound interest is one of the basic building blocks in banking and one of the most powerful financial forces around that determine the outcome of your investments. Unless you are an accounting graduate, financial analyst or an experienced investor, it might be a bit difficult to grasp the concept from specialized financial books and manuals. The aim of this article is to make it easy : ) You will also learn how to use a compound interest formula in Excel and create a universal compound interest calculator for your own worksheets.
What is compound interest?
In case of compound interest, the principal in each time period is different. The bank won't give the earned interest back to you, instead they add it to your principle investment. This increased amount becomes the principal for the next time period (compounding period) and also earns interest. In other words, you earn interest not only on the principal amount, but also on the interest earned in each compounding period. In our example, in addition to the principle amount of $10, the earned interest of $0.70 will also earn interest next year. So, how much will your $10 deposit be worth after 2 years at the annual interest rate of 7%? The answer is $11.45 and you can calculate it in several ways, as demonstrated below. How to calculate compound interest in ExcelLong time investments can be an effective strategy to increase your wealth, and even small deposits can make a big difference over time. The Excel compound interest formulas explained further will help you get the savings strategy to work. Eventually, we are going to make a universal formula that calculates the future value of the investment at any of the compounding interest rates - daily, weekly, monthly, quarterly, or annual. Calculating annual compound interest in ExcelTo understand the idea of compound interest better, let's begin with a very simple example discussed at the beginning of this tutorial and write a formula to calculate annual compound interest in Excel. As you remember, you are investing $10 at the annual interest rate of 7% and want to know how yearly compounding increases your savings. Annual compound interest - Formula 1An easy and straightforward way to calculate the amount earned with an annual compound interest is using the formula to increase a number by percentage: In our example, the formula is As you remember, 1% is one part of a hundred, i.e. 0.01, so 7% is 0.07, and this is how percentages are actually stored in Excel. Keeping this in mind, you can verify the result returned by the formula by performing a simple calculation of 10*(1+0.07) or 10*1.07 and make sure that your balance after 1 year will be $10.70 indeed. And now, let's calculate the balance after 2 years. So, how much will your $10 deposit be worth in two years' time at an annual interest rate of 7%? The answer is $11.45 and you can get it by copying the same formula to column D. To calculate how much money you will find in your bank account at the end of 3 years, simply copy the same formula to column E and you will get $12.25. Those of you who have some experience with Excel formulas have probably figured out that what the above formula actually does is multiplying the initial deposit of $10 by 1.07 three times:
Round it to two decimal places and you will get the same number as you see in cell E2 in the screenshot above - $12.25. Naturally, you can directly calculate the balance after 3 years using this formula:
Annual compound interest - Formula 2Another way to make an annual compound interest formula is to calculate the earned interest for each year and then add it to the initial deposit. Assuming that your Initial deposit is in cell B1 and Annual interest rate in cell B2, the following formula works a treat: For the formula to work correctly, please mind the following details:
To find out how much interest you actually earned with annual compound interest, enter the formula Then enter You should see the earned interest's growth like in the screenshot below that reveals the real power of compound interest. The above examples do a good job illustrating the idea of compound interest, don't they? But none of the formulas is good enough to be called a universal compound interest formula for Excel. Firstly, because they do not let you specify a compounding period, and secondly, because you have to build an entire table rather than simply enter a certain duration and interest rate. Well, let's take a step forward and create a universal compound interest formula for Excel that can calculate how much money you will earn with yearly, quarterly, monthly, weekly or daily compounding. General compound interest formulaWhen financial advisors analyze the impact of compound interest on an investment, they usually consider three factors that determine the future value of the investment (FV):
By knowing these components, you can use the following formula to find out the future value of the investment with a certain compounded interest rate: To illustrate the point better, here are a couple of quick examples. Example 1: Monthly compound interest formulaSuppose, you invest $2,000 at 8% interest rate compounded monthly and you want to know the value of your investment after 5 years. First off, let's write down a list of components for your compound interest formula:
Input the above numbers in the formula, and you will get:
or
or
Example 2: Daily compound interest formulaI hope the monthly compound interest example is well understood, and now you can use the same approach for daily compounding. The initial investment, interest rate, duration and the formula are exactly the same as in the above example, only the compounding period is different:
Supply the above numbers into the compound interest formula, and you will get the following result:
As you see, with daily compounding interest, the future value of the same investment is a bit higher than with monthly compounding. This is because the 8% interest rate adds interest to the principal amount each day rather than each month. As you can guess, the monthly compounding result will be higher than annual compounding. All this is good, but what you really want is an Excel formula for compound interest, right? Just bear with me for a little longer, please. Now we are getting to the most interesting part - building your own powerful and versatile compound interest calculator in Excel. Universal compound interest formula in Excel (daily, weekly, monthly, yearly compounding)Usually, there is more than one way to do something in Excel and a compound interest formula is not an exception :) Although Microsoft Excel provides no special function for calculating compound interest, you can use other functions to create your own compound interest calculator. Let's start creating our Excel compound interest calculator with entering the basic factors that determine the future value of an investment in an Excel worksheet:
When done, your Excel sheet may look similar to this: All you need now is the compound interest formula to calculate the earned amount (Balance) based on the input values. The best news is that you don't have to re-invent the wheel. We will simply take the time-tested compound interest formula used by banking and other financial institutions and slightly modify its expressions so that Excel can understand it. Compound interest formula for Excel:
=Initial investment * (1 + Annual interest rate / Compounding periods per year) ^ (Years * Compounding periods per year)
When adjusted for the compound interest calculator shown in the screenshot above, the formula takes the following shape:
The numbers look rather familiar? Yep, these are the same values and calculations that we've performed with a monthly compound interest formula, and the result proves that we did everything right! If you want to know how much your investment will be worth at an 8% annual interest rate compounded quarterly, simply enter 4 in cell B5: To calculate the future value of your investment with semi-annual compounding, enter 2 as the Compounding periods per year value. For weekly interest rates, enter 52, this is how many weeks each year contains. If you are interested in daily compounding, enter 365, and so on. As you see, we've created a truly universal compound interest calculator for Excel. Hopefully, now you have no regrets that you invested a few precious minutes in figuring out the tricky compound interest formula used by financial planners : ) And now, it's time to use this formula in your Excel spreadsheets, or you can download the compound interest calculator we've just created. Advanced compound interest calculator for ExcelIf for some reason you are not quite happy with the compound interest formula discussed above, you can create your Excel compound interest calculator with the Future Value function that is available in Microsoft Excel 2013, 2010, 2007, 2003 and 2000. Excel's FV function returns the future value of an investment based on factors similar to what we have just discussed, though its syntax is a bit different: In the function, the first 3 arguments are obligatory and the last 2 are optional.
Let's use Excel FV formula with the same values as in monthly compound interest examples and see whether we get the same result. As you may remember, we deposited $2,000 for 5 years into a savings account at 8% annual interest rate compounded monthly, with no additional payments. So, our Excel compound interest formula goes as follows:
If you need some explanation of the parameters, here you go:
Compound Interest Calculator Excel Free Download For MacAs demonstrated in the following screenshot, the FV formula returns the same result as the compound interest calculator that we created in the previous example. Naturally, nothing prevents you from replacing the values in the FV function with cell references, and then your FV formula will double-check the result returned by our Excel compound interest calculator:
The screenshot below shows the future value of $4,000 investment after 15 years at an annual interest rate of 7% compounded weekly: Ruger age by serial number. Aug 13, 2003 - The most common question we are asked is 'When was my Ruger Made?' Click Here for Ruger's 'Caliber and Serial Number History' Page! 10/22 Rifle Caliber: 22 LR. Beginning Serial Number: Years of Production: 1, 1964. 131304, 1968. 186076, 1969. Standard & Mark I Pistol (manufactured from 1949 to 1982) Caliber: 22 LR. Beginning Serial Number: Years of Production: 1, 1949. What if any info is available online for serial number year and any specs. I am interested in a well used (not really collectable, very worn bluing. To make your Excel compound interest calculator even more powerful, you can extend it with the Additional contributions option (additional payments) and modify the compound interest formula accordingly. Where:
If you are curious to try this advanced compound interest calculator for Excel to compute your savings, feel free to download it. Compound Interest CalculatorCompound interest calculators onlineIf you prefer investing money rather than time in figuring out how to calculate compound interest in Excel, online compound interest calculators may come in handy. You can find plenty of them by entering something like 'compound interest calculator' in your preferred search engine. In the meantime, let me quickly present a couple of my favorite ones. Compound interest calculator by BankrateThe key benefits of Bankrate compound interest calculator is ease-of-use and visual presentation of the results. This calculator lets you enter the savings inputs manually in boxes or by moving a slider. As you do this, the estimated total is displayed on top and immediately reflected in the graph below: Clicking the View Report button generates a 'Summary Report' as well as 'Savings Balance' that provides the detailed info on the amount of additional contributions, earned interest and balance for each year. Compound interest calculator by Money-ZineThe online calculator from Money-Zine is much simpler compared to Bankrate's one. It asks you to specify only 3 values: the principle investment, interest rate and duration. As soon as you supply these numbers and click the Calculate button, it will show you all types of compound interest rate (daily, weekly, monthly, annual, etc.) as well as the future values with a corresponding compounding. Compound interest calculator by MoneySmartExcel Interest Calculator TemplateThis is a really nice online compound interest calculator run by Australian Securities and Investments Commission. It lets you input all relevant factors that determine the future value of your investment and outputs the result as a graph. By hovering over a certain bar in the graph, you can see the summary info for that particular year. This is how you calculate compound interest in Excel and outside it :) I hope at least one compound interest formula discussed in this article has proved helpful to you. Anyway, I thank you for reading and hope to see you on our blog next week! Compound Interest Calculator Excel Free Download PdfYou may also be interested in:
0 Comments
Leave a Reply. |