In this formula FV is the future or ending value I is the interest and P is the principal. R Nominal Rate the rate they mention n number of periods that are compounded example. If the interest on your investment is paid monthly while being quoted as an annual interest rate the Excel compound interest formula becomes.
Subtract 1 from the outcome so that we only account for the growth not the original 100.
T time in years If the principal amount is compounded annually the formula is. For this example if the money were going to accrue interest for 18 months or three semiannual periods you would multiply 10245 by 10245 by 10245 to get 107531546. P 1 r100t 1 We also have compound interest formula for half-yearly and quarterly which we will discuss in the subsequent sections. Compound interest is based on the amount of the principal of a loan or deposit and interest rate which accrues in conjunction with how often the loan.