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how to calculate compound interest return. This formula is applicable if the investment is getting compounded annually means that we are reinvesting the money on an annual basis. Monthly compounding is calculated by principal amount multiplied by one plus rate of interest divided by a number of periods whole raise to the power of the number of periods and that whole is subtracted from the principal amount which gives the interest amount.
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Step 2 For principal we will provide the reference of B1 cell and for schedule we will specify 00125 as this is the value we get when we divide the 5 with 4. Compound returns are a more accurate measure as compared to average returns to calculate growth or decline in an. The P in the formula above stands for your principal thats the amount that you start with.
Plugging the same numbers into the formula for calculating annualized total return looks like this.
Compound returns are a more accurate measure as compared to average returns to calculate growth or decline in an. A P1rn nt CI A-P Where CI Compounded interest A Final amount P Principal t Time period in years n Number of compounding periods per year r Interest rate. Step 2 For principal we will provide the reference of B1 cell and for schedule we will specify 00125 as this is the value we get when we divide the 5 with 4. The P in the formula above stands for your principal thats the amount that you start with.
