Compound Interest is an interest you calculate on the principal and the previous interest amount. In this tutorial, we will learn to calculate it in Google Sheets.
And for this, we have two different ways:
- Using Simple Formula
- Using FV Function
Let’s get started.
Simple Formula to Calculate Compound Interest
To calculate compound interest using a simple formula, you need to write it in the following way:
=Principal Amount*((1+Annual Interest Rate/Interval)^(Total Years of Investment*Interval)))You can use this simple formula to get the final amount with the compound interest. You can change the interval according to your requirement.
1. Yearly Basis
=Principal Amount*((1+Annual Interest Rate/1)^(Total Years of Investment*1)))
2. Quarterly Basis
=Principal Amount*((1+Annual Interest Rate/4)^(Total Years of Investment*4)))
3. Monthly Basis
=Principal Amount*((1+Annual Interest Rate/12)^(Total Years of Investment*12)))
4. Daily Basis
=Principal Amount*((1+Annual Interest Rate/365)^(Total Years of Investment*365)))
Get Compound Interest by using the FV Function
The FV function stands for future value. So, you can get the future value of an investment by using a fixed rate. And below is the argument in the FV function which you need to specify:
And using these arguments, you can create a formula like this:
=FV(interest/intervals,years*interval,0,-principal_amount)Note: In this formula, you must specify the principal amount as negative.
1. Yearly Basis
=FV(interest/1,years*1,0,-principal_amount)
2. Quarterly Basis
=FV(interest/4,years*4,0,-principal_amount)
3. Monthly Basis
=FV(interest/12,years*12,0,-principal_amount)
4. Daily Basis
=FV(interest/365,years*365,0,-principal_amount)