Need formula to figure compound interest of a deposit for a year
 

I need to know if I deposit a fix amount (i.e. $10,000) at a fixed interest
rate (i.e.5%)
what is the compound interest at the end of the year. Need one formula in
one cell not a schedule by month

Assuming you mean "monthly compounding".

=(1+0.05/12)^12*10000-10000

= $511.62





Don Pistulka

"Usedtobesmart" wrote in message
...
I need to know if I deposit a fix amount (i.e. $10,000) at a fixed interest
rate (i.e.5%)
what is the compound interest at the end of the year. Need one formula in
one cell not a schedule by month

If you want to see the amount for any particular period you can also use the
CUMIPMT and CUMPRINC functions (look at
http://www.auditexcel.co.za/financial.html to see how to use them)

"Usedtobesmart" wrote:

I need to know if I deposit a fix amount (i.e. $10,000) at a fixed interest
rate (i.e.5%)
what is the compound interest at the end of the year. Need one formula in
one cell not a schedule by month

As soon as you say "compound", it implies more than once per year. This
covers any number of compounds for a year:

Total SUM = Deposit *( 1 + i/n)^n*N

where Total Sum is the resulting amount after investing the initial
Deposit at your nominal interest rate, i (expressed in decimal form,
your 10% =0.10), and compounding it n times per year for N years. As
you see, as n gets larger,e.g. semi-annual, n=2, quarterly, n=4,
monthly, n=12, etc., then Total SUM approaches an upper limit. If you
want continuous compounding where n approaches infinity (wouldn't we
all love this on our bank accounts), then

Total SUM = Deposit * EXP^i*N

In reality, for small amounts of Deposit, daily compounding with n=365
is very close to the upper limit. so we're not so bad off after all.
The above is easily expressable in Excel.
I hope this helps. GeorgeF


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