We will need to convert our number of years into a number of months by multiplying it by 12.Since our interest rate is the annual rate, we will have to divide it by 12 to make it monthly.There are two important concepts we need to use since we are using monthly contributions: In our example below, we have the table of values that we need to get the compound interest or Future Value from using Excel Investment Calculator: This is an optional argument and by default, its value is set to 0. – It is should be 0 if the annuity is received at the end of the compounding period and 1 if it received at the beginning of the compounding period.If this is omitted, make sure you provide Excel with a PV. =FV( interest rate, number of periods, periodic payment, initial amount)
Thankfully there is an easy way to calculate this with Excel Investment Calculator – The FV formula! FV stands for Future Value. How much would be available for you at the end of your investment? What if you are also putting in monthly contributions to your investment? Now that’s a lot more challenging to compute now! If you need to calculate the future value of an interest when compounding frequency is quarterly, you can simply change the value in cell B6 to 4.Ĭomputing the compound interest of an initial investment is easy for a fixed number of years. This is how your Monthly Investment Calculator Excel will look like: Once, you have provided Excel Investment Calculator with all the necessary inputs it will calculate the FV of the investment for you which is $5,962 in this case. STEP 3: Since compounding is done monthly, we need to multiple the no of years (cell B6) with compounding frequency (cell B5). STEP 2: The annual interest rate is in cell B4 and the interest is compounded monthly so the interest will be divided by the compounding frequency 12 (in cell B6). STEP 1: The Present Value of investment is provided in cell B3. 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). You can determine how much your money will grow using Excel Investment Calculator.Ĭompound interest is often referred to as “interest on interest” i.e. It is a powerful tool used to determine the outcome of your investments. No-code required.Excel Investment Calculator can calculate compound interest and provide the future value of an investment.
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