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Compounding Interest
I need to calculate compounding interest. Example I have an account that had
a balance of 40,000 in FY02. The account now has 72,000 at the end of FY07. I need to calculated what the compounded interest rate was for the time between 02 and 07. |
#2
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Compounding Interest
On Dec 13, 3:29 pm, Rich Stanek wrote:
I need to calculate compounding interest. Example I have an account that had a balance of 40,000 in FY02. The account now has 72,000 at the end of FY07. I need to calculated what the compounded interest rate was for the time between 02 and 07. You can use the rate function which has the following format: RATE(nper,pmt,pv,fv,type,guess) If we assume the 40,000 is the end of 02 balance, then the formula is: =RATE(5,0,-40000,72000,0) for an answer of 12.47%. Nper is the total number of payment periods in an annuity. Pmt is the payment made each period and cannot change over the life of the annuity. Typically, pmt includes principal and interest but no other fees or taxes. If pmt is omitted, you must include the fv argument. Pv is the present value -- the total amount that a series of future payments is worth now. Fv is the future value, or a cash balance you want to attain after the last payment is made. If fv is omitted, it is assumed to be 0 (the future value of a loan, for example, is 0). Type is the number 0 or 1 and indicates when payments are due. Mike Anas http://mikeanas.googlepages.com/ |
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