calculate compound interest in excel

Calculate compound interest in excel

 Compound interest is the amount that a unit of money committed at present will be worth in a given amount of time period at a specific compounded rate of interest per period of time.

Excel doesn't include a default function for ascertaining compound interest, you will be able to apply the following formula for this computation

=PresentValue*(1+Rate)^N where PV is present value, R is the interest rate, and N is the number of investing periods

.So, U can use this formula in Excel to calculate compound interest in excel.

At the same time however, you can create a custom function (explained below) which when used will add a generic custom function to Excel default list of functions.

Function CompoundInterest(PresentValue As Double, Rate As Double, Numberofyears As Double) As Double

    CompoundInterest = PresentValue*(1+Rate)^Numberofyears  

End Function

Once you have the custom function defined in your workbook code. (Alt + F11)

You can type the following formula in any cell.

=CompoundInterest(A1,A2,A3)
where A1, A2, and A3 are cells containing present value, rate, and number of time periods respectively to calculate compound interest in excel.