Compound by  mathman2000  mathman2000 
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Interest rate as percentage (per time period - year/month?)Initial capital sum1 + interest rate (used as variable by the formulae in column C).
.025
2.5%
100001.025
Time period no.110250
(max. 90 ). *210506.249999999998Instructions and explanations
310768.906249999996Enter the interest rate (as a decimal figure e.g. 5% = .05) in cell B2
411038.128906249995Enter the initial capital sum - Euros or Pounds Sterling or whatever in cell C2
511314.082128906244
611596.9341821289The examples given assume units of years and interest rates per year: This does not
711886.85753668212need to be so, for example:-
812184.028975099172EURO 80,000 over seven years at 8%, but with the interest added each month.
912488.62969947665This translates to 84 monthly periods at .666666% per month.
1012800.845441963565(.666666 is 1/12 of 8% - a recurring decimal, taken to 6 figures to agree with conor71's
1113120.866578012654example elsewhere in "Numsum" (Thank you))
1213448.888242462968Period 84 (end of year 7) gives (rounded) EURO 139,794
1313785.110448524541
1414129.738209737654Typical use 1 - Yield on fixed interest investment
1514482.981664981095After 15 years at 5% you have doubled your money! (or have you - what about inflation?)
1614845.05620660562
1715216.18261177076
1815596.587177065028Typical use 2 - What inflation does
1915986.501856491652In your country inflation is around 2.5%?? - how does that affect you in the long term?
2016386.16440290394Let's look at Germany - stable inflation at around 2.5% (.025 in cell B12)
2116795.818512976537Let's assume we have a fixed income of EURO 10,000 per year
2217215.71397580095After 5 years we would need a supplement of EURO 1,314 to maintain our living standard.....
2317646.106825195973
2418087.25949582587
2518539.440983221517Typical use 3 - Saving for retirement
2619002.927007802053Assume we want to retire in 23 years time and want a nest-egg of $500,000.
2719478.0001829971We have a sure investment that will pay 7% over the 23 years.
2819964.950187572027A bit of trial and error shows that we need an initial capital sum of around $108,000!
2920464.073942261326In reality most people save for retirement over many years - not with a "once-off" investment.
3020975.67579081786Also in most countries the government gives some form of subsidy to retirement savings -
3121500.067685588303so it is a lot more complex than detailed here. One benefit of looking at the simple
3222037.56937772801compound interest calculation is that it shows the merit of investing from an early age for
3322588.50861217121a pension.
3423153.221327475487
3523732.051860662374* To extend the number of periods simply add more entries in Columns B and C.
3624325.35315717893Column B merely holds the period number; Column B a formula in the form C?? * E2, where
3724933.486986108404?? is the current row period number plus 1.
3825556.824160761113
3926195.74476478014
4026850.63838389964
4127521.904343497128
4228209.951952084553
4328915.200750886666
4429638.08076965883
4530379.0327889003
4631138.508608622804
4731916.97132383837
4832714.895606934326
4933532.76799710768
5034371.08719703537
5135230.36437696125
5236111.12348638528
5337013.90157354491
5437939.249112883525
5538887.73034070561
5639859.92359922325
5740856.421689203824
5841877.83223143392
5942924.77803721976
6043997.89748815025
6145097.844925354
6246225.291048487845
6347380.92332470004
6448565.44640781754
6549779.58256801297
6651024.07213221329
6752299.673935518615
6853607.165783906574
6954947.34492850423
7056321.02855171683
7157729.054265509745
7259172.28062214748
7360651.58763770117
7462167.87732864369
7563722.07426185978
7665315.12611840627
7766948.00427136642
7868621.70437815056
7970337.24698760432
8072095.67816229443
8173898.07011635178
8275745.52186926057
8377639.15991599207
8479580.13891389187
8581569.64238673917
8683608.88344640765
8785699.10553256783
8887841.58317088202
8990037.62275015406
9092288.5633189079
 
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Name:  Compound by  mathman2000 mathman2000 
Description:  Compound interest calculation with explanation
Tags:  compound interest  
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