The general formula for compound interest is. Step 1 We need to name cell E3 as Rate by selecting the cell and changing the name using Name Box. This formula is applicable if the investment is getting compounded annually means that we are reinvesting the money on an annual basis.
To calculate the monthly compound interest in Excel you can use below formula.
The basic compound interest formula for calculating a future value is F P 1 rate nper where F the future accumulated value P the principal starting amount rate the interest rate per compounding period. The formula now becomes. For the fourth year the compound interest is 5625 562505 5625 28125 84375. You need the beginning value interest rate and number of periods in years.