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Compounded Interest Rates
How do I set up a formula to compound interest on a monthly basis? The
amount would be 10,000 and the interest rate would be 2%. -- Laurie |
#2
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Compounded Interest Rates
On Feb 2, 11:17*am, lkh wrote:
How do I set up a formula to compound interest on a monthly basis? *The amount would be 10,000 and the interest rate would be 2%. Is that the annual interest rate? Or is that the annual percentage yield? Or is that the monthly rate? Typically, it is the annual interest rate. The formula to compound interest monthly is: =B1*(1+2%/12) where B1 is the previous balance. If the above formula is in B2, you can copy it down. More compactly, if you want the ending balance after compounding interest for a number of months in A1: =fv(2%/12, A1, 0, -B1) Note: Those formulas compute ending balances; that is, they __apply__ the compound interest rate. If that is not what you want, please clarify. "How to compound interest" is ambiguous. If 2% is the APY, the monthly rate is RATE(12,0,-1,1+2%). Substituted that (or a cell reference) for "2%/12" above. |
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