Just enter a few data and the template will calculate the compound interest for a particular investment. Additionally, the template also provides a schedule of payments and accumulated interests in each period. The basic calculator consists of 2 sections: Input and Output. Those cells having light-blue color is the input section and cells with dark blue are the output section.
The Output section is auto-populated based on the above-entered data. It consists of the following heads:. The input section is the same as the above. Compounding frequency and deposit frequency both have a drop-down list.
Select the desired option fro the list where:. Total Additional Payments: It is the total additional payments made. Payments multiplied by pay periods. The template creates a payment and interest schedule based on the data input in the Advanced Compound Interest Calculator. No entry is to be made on this sheet. It is auto-populated. Any modification you make to one of the input parameters will be immediately reflected in the output results. All in all, Compound Interest Calculator does a good job despite being so simple.
It would have been great if the values had been gathered inside a graph, so as to better assess the evolution of an investment or loan. Compound Interest Calculator. A very simple, yet efficient Excel-based application whose main purpose is to easily calculate the compound interest for a loan or investment. These values for rate and nper can then be used in the compound interest formulas mentioned above.
A common example where this formula is needed is for a savings account where the interest is compounded daily but deposits are only made monthly. Another real-world example is the Canadian mortgage where the compounding is semi-annual 2 times per year and the payments are monthly 12 per year. Traditional amortized loans use the same formulas as those defined above for savings, except that the loan amount is represented as a negative value for the starting principal, P. Payment amounts A are still positive values.
The formula for the payment amount is found by solving for A using the formula from Figure 1. In Excel, you can use the PMT function.
Argument 1 : Yes. The table in Example 5 clearly shows that the new principal is calculated by adding the interest and the payment to the previous principal. The formulas are exactly the same as the savings example, except that you are starting with a negative principal. The formulas show that interest IS added to the principal, which satisfies the definition of compound interest, and that explains why you can use the compound interest formulas in traditional loan calculations.
Argument 2 : No. Instead, you must first pay the amount of interest that you are charged, and the rest of your payment is applied to the principal. This is how almost all amortized loans are worded.
You are paying the interest first, so no interest is added to the principal. Therefore, you are not paying interest on interest if your payments are enough to completely pay the interest charged each period.
I was in the camp of Argument 2 for many years, and it wasn't until creating these compound interest calculators that I realized Argument 2 is just legal jargon - a way to claim you aren't paying interest on interest. The parentheses tell us to first add the interest a negative value in this case to the loan payment.
Then, the result is added to the principal. Does that actually change the final value? Of course not. Argument 2 then says "Yeah, but your payment is enough to completely pay the amount of interest charged, so no interest is actually added to the principal.
Therefore, you aren't paying interest on interest. Argument 1 replies with "Yeah, but without affecting the result, the math allows me to consider my payment to be applied to the original principal, with the interest added afterward.
Thus, I AM paying interest on interest. Argument 2 would then say "Our definition of the loan payment means that you are forced to add the amounts in parentheses first, so we are allowed to say we aren't adding interest to the principal.
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