In simple interest the interest is calculated based on the initial deposit for every interest period. The formula for compound interest is P 1 rn nt where P is the initial principal balance r is the interest rate n is the number of times interest is compounded per time period and t is the number of time periods. The formula used for arriving at the maturity value of a recurring deposit over a certain period at a certain interest rate is.
P initial value 2500 n compounding periods per year 12 r nominal interest rate compounded n times per year 4 004 i periodic interest rate rn 00412 000333333 y number of years 5 t number of compounding periods ny 125 60 d periodic deposit 100.
In simple interest the interest is calculated based on the initial deposit for every interest period. Add a percent sign after the figure to tell Excel to treat it as a percentage. Enter the interest rate for the compounding period in cell A1. This formula will add the Principal at the start of the period E9 to the interest earned E9 D412 for the period.