We’ll have to multiply this value with the interest rate. Cell C5 contains the original principal (Present value).Now let’s find the monthly compounded interest using the above formula in Excel. Suppose a client borrowed $10000 at a rate of 5% for 2 years from a bank. In this method, we’ll use the basic mathematical formula to calculate monthly compound interest in Excel. So according to the mathematical formula, the monthly compound interest will be-ģ Formulas to Calculate Monthly Compound Interest in Excel Formula 1: Calculate Monthly Compound Interest Manually in Excel Using the Basic Formula Suppose a borrower took a $5000 loan at a 10% annual interest rate for 5 years. R = Interest rate in percentage per year. It’s also known as ‘Interest on interest’ and it grows an amount faster than simple interest. And it is called monthly compound interest when the interest is compounded after each of the 12 months through the whole year. It is the interest that you get both on your initial principal and on the interest you earn with the passage of each compounding period. Compound Interest with Monthly Compounding PeriodsĬompound interest is the total interest that includes the original interest and the interest of the updated principal which is evaluated by adding the original principal to the due interest.
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