Wikipedia:Reference desk/Archives/Mathematics/2015 December 2

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December 2

Formula for Excel

I am trying to figure out how to enter a formula for excel to compound interest daily. I know how to do it if it was simple interest but no idea how to do it for daily compounding interest. For simple interest, using a round number as an example, say, $10,000 and say 6% interest, for say a 180 day period, it would be:

=sum(10000*.06/365*180 (right?)

But how would I make this compounding interest, compounding daily (this is not just theoretical, I have real numbers to apply this to, for a real world issue). Thanks in advance.--108.21.87.129 (talk) 15:54, 2 December 2015 (UTC)

What you need is the formula at Compound_interest#Periodic_compounding: $A(t)=A_{0}\left(1+{\frac {r}{n}}\right)^{nt}=A_{0}\left(1+{\frac {r}{n}}\right)^{d}$ where r is the nominal annual interest, n is the number of periods in a year (since we're compounding daily, it is 365), t is the number of years, and d is the number of days.

So with your example numbers the Excel formula is

= 10000 * (1+0.06/365)^180

-- Meni Rosenfeld (talk) 18:11, 2 December 2015 (UTC)

Wonderful. Plugged it in with the applicable principal/rate/duration. Works! Thanks--108.21.87.129 (talk) 18:45, 2 December 2015 (UTC)

Also, though I don't know the details, I believe Excel has a compounding interest function built in. -- SGBailey (talk) 13:30, 3 December 2015 (UTC)

Well, this works fine. Anyway, I use an old version of Excel so there's no telling whether it includes it, even if the latest does.--108.21.87.129 (talk) 23:35, 4 December 2015 (UTC)

See help and examples of finance functions in excel to have a defined result. --Hans Haase (有问题吗) 22:28, 5 December 2015 (UTC)