Suppose you invest $4000 for a period of 8 years at a monthly compound interest of 5% and you want to know the value of the investment after 8 years. Let’s take an example to understand how this formula works in Excel. Using these three factors, you can find out the future value of your investment with a certain compounded interest rate. To calculate the future value of your investment, you need to know three factors: Let’s see how it can be done! Calculation using Mathematical Formula ![]() Using Excel Investment Calculator, you can easily calculate different attributes of compound interest. So, you will earn a total of $21 in interest rather than $20 as in the case of simple interest. In the first year, you will earn $100*0.10 i.e. The longer you save, the more interest you will earn.įor example, you deposit $100 for 2 years at a compound interest of 10%. you earn interest on both:Īs opposed to simple interest, it is assumed that the interest earned is reinvested and in the future periods, you will be earning interest on both principal and reinvested interest (not just on principal amount). ![]() Compound interest is often referred to as “interest on interest” i.e.
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