Compound interest formula

Compound interest formula monthly in excel Indian compound interest formula how accumulated the interested.

Compound interest formula

The main power to become rich is to gain the habit of saving, when we are talking of saving the other term that comes to mind will the interest that we get on our savings. Compound interest is the bullet that will magically increase your saving and investing technique. We can even say that the eighth wonder of the world is the Compound interest formula. This was one of the greatest mathematical discoveries that we got in our lifetime. The Compound interest formula calculate in a very simple manner. Compound growth need by every person – be it for saving or for taking loan on interest basis. Base on the formula of compound interest, the interest will be compound yearly and the Compound interest formula in India is as below:

A=P (1+R) Y whereby:

A= the accumulated amount- the amount that is accumulated for n years including the interest

P = the principal (the money you deposit initially)

R = rate of interest (AER) as a decimal

Y = the number of years or the term period of the deposit

Monthly compound interest formula

In the above state instance, the amount of interest was compound annually, but some people may not like to compound it yearly, they may compound it monthly or even quarterly. So it is highly important to know the frequency of the returns before you can invest in any deposits that gets compounded interest, for calculating the quarterly compound interest formula is as follows:

Quarterly compounding = P (1+R/4)4

For monthly compounding the formula is = P (1++R/12)12

The more the frequency of the compounding interest, the great will be the impact of compound growth.

Compound interest formula in India

The compound interest formula in India is done by adding the interest to the initial amount of your investment and so you can expect your principal amount to be added each time the interest is compounded. This is an interest wherein you will have more interest or get more interest. This interest is not like the simple interest. In simple interest, your simple interest will be the same all over the term period irrespective of the term period of your investment, but in the compound interest, your interest will increase each year as the principal amount will change every year, so we can say the more number of term period will enable you to get more interest amount as compared to the simple interest.

Compound interest formula in Excel

Calculating a compound interest may be difficult as the amount and formula of calculation is different, the simple interest will be standard from the compound interest. It is easy and simple to calculate thecompound interest formula in Excel, you have to merely enter the amount, the interest and the term period and you can very easily calculate the same using the excel sheet:

  1. Enter principal value in a cell
    2.      Enter the annual interest rate in decimal in another cell
    3.      Enter the number of years in another cell
    4.      Enter the formula in cell – giving the cell details of principal amount, rate of interest, term period.
    5.      The resultant will show you the compound interest.
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Bonthala srinivas :Expert in Finance Department, taxation, insurance, loans Graduated in master of commerce from Osmania university. Small Business owner in travel & tourism.