Interest Earned on Investment w/Daily Compounding
I am looking for a function that will allow me to calculate interest earned
on an investment such as a 3 year CD, that compounds daily. Thanks, Lia |
If I invest P dollars at r% then at then end of the period it is worth P +
Pr or P(1+r) So after the second period it is worth P(1+r) + P(1+r)r (principal + interest) This the same as P(1+r)^2 So after n periods it is worth P(1+r)^n. Since it was worth P at the start, the interest is P(1+r)^n - P If the annual rate is R, the daily rate is R/365 (r=R/365) 3 years is 3*365 so n=3*365 Some people use a fictional 360-day year for these calculations best wishes -- Bernard V Liengme www.stfx.ca/people/bliengme remove caps from email "Liz" wrote in message ... I am looking for a function that will allow me to calculate interest earned on an investment such as a 3 year CD, that compounds daily. Thanks, Lia |
Thanks a lot!
Liz "Bernard Liengme" wrote: If I invest P dollars at r% then at then end of the period it is worth P + Pr or P(1+r) So after the second period it is worth P(1+r) + P(1+r)r (principal + interest) This the same as P(1+r)^2 So after n periods it is worth P(1+r)^n. Since it was worth P at the start, the interest is P(1+r)^n - P If the annual rate is R, the daily rate is R/365 (r=R/365) 3 years is 3*365 so n=3*365 Some people use a fictional 360-day year for these calculations best wishes -- Bernard V Liengme www.stfx.ca/people/bliengme remove caps from email "Liz" wrote in message ... I am looking for a function that will allow me to calculate interest earned on an investment such as a 3 year CD, that compounds daily. Thanks, Lia |
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