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MS Office Forum / Excel / New Users / July 2007Formula - Compound Interest?
Does anyone know any easy way to calculate the value of an investment where you put for example, $1000 per week into an account that has 6% interest for 12 months. Also, similar scenario where you put $4000 per month into an account @ 6% interest. How do you calculate it's value after 12 months. Thanks > Does anyone know any easy way to calculate the value of an investment where > you put for example, $1000 per week into an account that has 6% interest for > 12 months. Also, similar scenario where you put $4000 per month into an > account @ 6% interest. How do you calculate it's value after 12 months. To compute this accurately, you need to specify the compounding frequency. To simplify computation, we might assume that the compounding frequency is the same as the deposit frequency. But understand that that is normally not true in real life. Also, you need to specify the nature of the investment so that we can properly interpret what you mean by "6% interest". The following applies to regular savings accounts. Weekly: =fv(6%/52, 52, -1000) Monthly: =fv(6%/12, 12, -4000) If you want to see the mathematical formula, look at the PV help page. (Yes, PV, not FV. Sigh.) Errata.... On Jul 8, 12:13 am, I wrote: > Also, you need to specify the nature of the investment so that we can > properly interpret what you mean by "6% interest". The following > applies to regular savings accounts. > > Weekly: =fv(6%/52, 52, -1000) > Monthly: =fv(6%/12, 12, -4000) More to the point, you need to specify whether "6% interest" is the nominal rate or the APY (e.g. compound rate). I made the assumption above that it is the nominal rate in order to keep it simple. Errata #2 (sigh).... On Jul 8, 12:13 am, I wrote: > Weekly: =fv(6%/52, 52, -1000) > Monthly: =fv(6%/12, 12, -4000) Those should be: Weekly: =fv(6%/52, 52, -1000, 0, 1) Monthly: =fv(6%/12, 12, -4000, 0, 1) The "1" at the end puts the payment at the beginning of the period. Again, this assumes the 6% is the nominal interest rate, not the APY (compounded rate). Sun, 8 Jul 2007 16:49:57 +1000 from JoeBloe <leavemealone@hotmail.com>: > Does anyone know any easy way to calculate the value of an investment where > you put for example, $1000 per week into an account that has 6% interest for > 12 months. Also, similar scenario where you put $4000 per month into an > account @ 6% interest. How do you calculate it's value after 12 months. Insert | Function and type "compound interest" (no quote marks) in the first box.  SignatureStan Brown, Oak Road Systems, Tompkins County, New York, USA http://OakRoadSystems.com/ > Does anyone know any easy way to calculate the value of an investment where > you put for example, $1000 per week into an account that has 6% interest for > 12 months. Also, similar scenario where you put $4000 per month into an > account @ 6% interest. How do you calculate it's value after 12 months. > > Thanks Check out Excel help for the FV function. |
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