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MS Office Forum / Excel / New Users / April 2007Finding interest
I'm sure this must be easy to do, but I've reviewed all of the interest-related functions and MS's help pages, tried a few out, and a workable solution keeps evading me. I'd appreciate any insight into the following: I need to find the dollar amount resulting at a specific time when principal has earned a simple rate of interest. For example: Jane Doe receives judgment against John Doe for $1,000, and the post- judgment rate is 5%. John does not pay Jane until four months after the judgment has been entered. How do I find the amount of interest that John has to pay, which has accumulated at 5% over the four months that he did not pay Jane? Joseph I'm not sure about this, but I think this is the way. 0.05 interest is 0.004166667 per calander month (.05/12). You could simply multiply this by 4 and then muliply the result by the principal 1000 to give you the interest and then add this to the principal giving 1016.666667 However, this understates the amount somewhat and if the late payment drags on for years you need to use compound interest. Interest owed ==(1+B2/12)^B4*B3 where B2 contains the annual interest rate, B4 contains the months late and B3 contains the principal. Regards Peter > I'm sure this must be easy to do, but I've reviewed all of the > interest-related functions and MS's help pages, tried a few out, and a [quoted text clipped - 8 lines] > that John has to pay, which has accumulated at 5% over the four months > that he did not pay Jane? > I need to find the dollar amount resulting at a specific time when > principal has earned a simple rate of interest. For example: Jane [quoted text clipped - 3 lines] > that John has to pay, which has accumulated at 5% over the four months > that he did not pay Jane? You say "simple rate of interest". Do you mean that interest does not compound? If so, then the following might suffice: =1000*5%*4/12 You could be more precise by computing daily interest, as follows: =1000*5%*(A2-A1)/365 where A1 and A1 are the judgment date and the payment date respectively. If you mean that interest compounds at the stated nominal rate (5%), you might compute accumulated interest as follows: =fv(5%/365, A2-A1, 0, -1000) - 1000 Maybe one way... =FV(5%/12,4,0,-1000) $1,016.77  SignatureHTH :>) Dana DeLouis Windows XP & Office 2007 > I'm sure this must be easy to do, but I've reviewed all of the > interest-related functions and MS's help pages, tried a few out, and a [quoted text clipped - 8 lines] > that John has to pay, which has accumulated at 5% over the four months > that he did not pay Jane? =FV(5%/12,4,0,-1000) Thanks everyone. One remaining question: Why is the principal a negative number in this argument? > =FV(5%/12,4,0,-1000) > > Thanks everyone. One remaining question: Why is the principal a > negative number in this argument? Think of it as Cash Flow direction. Using the above formula, you might be spending (outgo, -) $1000 to buy an asset that will return (income, +) $1,016.77 in 4 months.
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