How to calculate Compound Interest in Excel - Formula with Examples 💻

Compound interest is defined as "the interest on savings calculated on both the initial principal and the accumulated interest from previous periods." Classically, known as "interest on interest", this is the most common type of interest used in everyday finance situations.
To calculate compound interest in Excel,
on principal amount P
at the rate of interest R
for the number of years N
and compounded T times per year
we can use the formula = P*(1+R/T)^(N*T)
In this video, understand how to calculate various kinds of compound interest values using Excel formulas.
⏱ Video Topics:
==============
0:00 - Compound Interest Calculations in Excel
0:40 - Compound Interest Formula
1:50 - Using the FV function to calculate compounded value
2:22 - Pop Quiz ⁉
2:40 - Compounding every quarter (or other durations)
4:52 - Understanding compounding effect (simple vs. compound interest over time)
6:34 - Effect of interest rates on the compounded value
7:57 - Compounding with regular payments (monthly for example)
10:26 - Reverse of compounding (using goal seek)
📁 Sample Workbook:
==================
Download the sample file and learn more about compound interest in Excel using this page 👇
chandoo.org/wp/compound-inter...
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#finance #excel

[@colinquekking9033]

Went thru so many examples in the net, and finally chanced upon yours. Clear and straightforward for very layman like me to understand. Thanks man :D

[@pujaagarwal8014]

Thanks you made it so easy to understand even children can understand by seeing this video

[@IvanCortinas_ES]

Absolutely pedagogical. Very instructive. Thank you!!!

[@RoySamuel]

Great, informative, educational, entertaining videos... Big fan.

[@gloystar]

Hey Chandoo, nice video bro. Can you make a video showing us how to construct such dynamic chart titles like the ones you did here (while also preserving currency formats and such)? It's amazing and I'd like to learn how to do it.

[@huzaifahshah3841]

Great work

[@chrism9037]

Excellent Chandoo!

[@exploreyourexcel]

I am your big fan Boss
first comment 😀

[@gauravupreti5612]

Chandoo, that was an excellent video. Can you please create a video demonstrating how to prepare an employee monthly performance sheet?

[@gopalkrishna8977]

meeru Thopu sir

[@jerrydellasala7643]

It's worth pointing out that spilled ranges often don't need locked cell references. For example, in the "Effect of Interest Rate on Compounding" section, you use the formula =FV(C122#,$D$118,,-$D$117), however the formula =FV(C122#,D118,,-D117) gives the same exact answer, and makes the formula more flexible and less error prone.
Likewise, the formula =$D$93*(1+$D$94/D$98:I$98)^($C99:$C102*D$98:I$98) in the "Effect of Compounding Frequency" section can be simplified to =D93*(1+D94/D98:I98)^(C99:C102*D98:I98).
And so on. Spilled Range is a beautiful thing!

[@chandoo_]

They are indeed very powerful and flexible.

[@TheAlwaysGoel]

Can u make videos on power query and Power pivot

[@ahmedshahzad9402]

Sir please make a video on advance ecommerce metrics e.g: CLV, CAC, COG, AOV, customer retention rate and more. Please.....

[@v_fiver]

Sir pls make video on salary bonus sheet all employees

[@gova3vardhan]

Hey Chandoo can you help in creating a solution at my workplace
How can I upload any PDF/Word file in a dedicated Excel cell and share the sheet with a team, so they can access the file I uploaded?

[@mkimpact]

Thanks Chandoo, a fantastic video. Can I please ask how would you modify the FV formula to include a starting amount? e.g. if you have $20,000 to invest, and want to add $5,000 per annum at 8% interest rate, how would you modify the formula to include this initial lump sum? Thanks

[@chandoo_]

You are welcome. You can use this variation.
=FV(8%,10,5000,20000)
calculates future value of initial investment of $20k + 5k per annum for 10 years at 8%

[@mkimpact]

@@chandoo_ fantastic thank you :)

[@khushdilinsaan3605]

Suggest me course for banking and finances

[@VJ_1985]

Can you help me in one formula in excel. Wherein I need 4 input boxes, two for From Date and To Date, Interest Rate per Month, And Principal Amount. Now I need a formula to calculate Compund interest on the principal amount wherein interest gets compounded every 11 months. A month always has 30 days. Even few days extra needs to be considered as a Full Month. I mean from 20-Mar-2022 to 25 - Mar-2024. It will be 24 months and 5 days, but it should calculate it as 25 months. Interest Needs to be calculated for first 11 months when duration is more than 11 months and then for the rest of the duration interest needs to be calculated on principal+11 months interest.

[@matinurrahman6173]

What happen when interest compounded quarterly with mothly installment payments declining method

[@chandoo_]

In this case, you create a schedule by month, calculate opening balance and closing balance of both interest and principal and then reduce the amounts. You can use ipmt and ppmt functions for some of the numbers.

[@shubhampaul790]

2nd Time

[@enteryourname4440]

can I have the template

[@venuchaganthi]

Hi Chandoo, How to contact you, we need advanced excel training.

[@chandoo_]

Please get in touch via chandoo.org/wp/power-bi-remote-training/

[@illiakhmaladze2071]

That should be $10,998,806.28 for 100 years If I'm correct

[@rockstar0r]

5k @ 8% in 100 years = 1,09,98,806.28

[@vabi151993]

How please?

[@udaykiranvanapalli1516]

for 100 Years $10,993,806.28

[@chanukamadusanka7442]

can someone tell me, how to download sample data set?🥲