Compound Interest
If the 4% is per period then both Sam and Mike are on track. However, if the
4% is per year and your conversion period is less than or more than one year,
you result will be in error. The annual percentage rate must be converted to
a rate per period. For 4% per year with monthly conversion, .04/12 = .00333
per period and quarterly conversion .04/4 = .01 per period.
"Robert" wrote:
Is there a formula that will calculate compound interest? Assuming 4%
interest each period, I can put the original dollar amount in cell A1, then
in cell B1 enter =sum(A1*.04)+A1, then in cell C1, =sum(B1*.04)+B1, etc.,
eventually arriving at the final answer but it takes up a lot of cells and is
pretty clunky.
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