Calculate compound interest

An excel formula to calculate compound interest


Related Functions

 Calculate compound interest

To calculate compound interest in Excel, you can use the FV function.

This example assumes that $2500 is invested for 11 years at an annual interest rate of 7%, compounded monthly.

In the example shown, the formula in C10 is:


How this formula works

The FV function can calculate compound interest and return the future value of an investment. To configure the function, we need to provide a rate, the number of periods, the periodic payment, the present value.

To get the rate (which is the period rate) we use the annual rate / periods, or C6/C8.

To get the number of periods (nper) we use term * periods, or C7 * C8.

There is no periodic payment, so we use zero.

By convention, the present value (pv) is input as a negative value, since the $2500  "leaves your wallet" and goes to the bank during the term.

The solution goes like this this:

=FV(C6/C8,C7*C8,0,-C5) =FV(0.07/13,11*13,0,-2500) =FV(0.00538,143,0,-2500) =5338.27

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