I would appreciate some help in locating a formula to calculate compound interest on an increasing principal. Can anyone please help.
I would appreciate some help in locating a formula to calculate compound interest on an increasing principal. Can anyone please help.
If you add to the principal at a constant rate, and the interest rate doesn't change, then simple use the FV function. Otherwise, you need to use a step wise method, using a table of variable input to FV at every change in rate or principal addition. Or else follow the suggestions given in the below thread.
How to Calculate Compound Interest
Hope this sample can help you out. The formula is * = End value of initial capital (1 + p) ^ n where p = interest rate (eg 0.05 for 5%) & n = term in years. There is also an Excel function: =-FV (p, n, 0, initial capital). However, this throws a negative result out from there - that's why the sign is used.
For this function ZW is recommended. It returns the future value of an investment at a constant rate and constant payments if necessary. A more detailed description of the function can be seen on the Office Excel Help website. For example, the formula = FV (3% / 12; xx, 0, -1000, 1) if interest is paid monthly at 3%, or = ZW (3% yy, 0, -1000, 1) at annual compounding. Xx or yy is for the period to be entered: the number of months for xx, yy the number of years that you are interested. 1000 is the investment that you have started.