Formula to Calculate Compounded Percentage Per Year
On Apr 21, 12:44 pm, Dermot wrote:
Problem
Can anyone provide me with a formula to calculate 6% per year on
an amount of currency (14,000), for a period determine between two
dates inclusive.
I think you mean: you want to calculate the "future value" after
applying the compounded annual rate (6%) on a principal sum (14000)
invested at the earlier date. Right?
My Thoughts
Determine the number of days using the formula:
Start date 4/7/2005 End date 4/7/2007
=DATEDIF(A2,B2+1,"d") = 798 days
If we can assume that 6% is the compounded annual rate (not the
nominal interest rate), then:
=rate(365, 0, -1, 1+6%)
provides the compounded daily rate (suppose that formula is in C2),
and:
=fv(C2, B2 - A2, 0, -14000)
is the value on the date B2 of the amount invested on A2.
Note that this is valid even if the compounding frequency is not daily
because I am assuming that 6% is the effective annual rate based on
whatever the true compounding frequency is.
Caveat: I am also assuming that either that effective annual rate was
determined in a 365-day year, or it does not matter. It matters only
if the actually compounding frequency is daily.
HTH.
----- original posting -----
On Apr 21, 12:44*pm, Dermot wrote:
Problem
Can anyone provide me with a formula to calculate 6% per year on an amount
of currency (14,000), for a period determine between two dates inclusive.
My Thoughts
Determine the number of days using the formula:
Start date 4/7/2005 *End date 4/7/2007
=DATEDIF(A2,B2+1,"d") * = 798 days
Then work out the 6% annual amount for every 366 days and remaining 66 days.
Not sure how to do this though...and I think I am overcomplicating the
calculation
Thanks in advance
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