How to Use Compound Interest Function in Excel

In this article, we will learn how to use Compound Interest function.

Compound Interest function Calculates the future value of the present amount over a period of time having an interest rate. We will be using FUTURE VALUE function here.

Future value function returns the future value of the present amount having interest rate over a period.
Syntax:

=FV (rate, nper, pmt, [pv], [type])

rate: Interest rate per period
nper: total no. of payment period.
pmt: amount paid each period.
pv – [optional] The present value of future payments must be entered as a negative number.
type – [optional] When payments are due. Default is 0.
Let’s understand this by using it in Example
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Excel Compound interest formula

=FV(B2/B4,B3*B4,0,-B1)

B2/B4: rate is divided by 12 as we are calculating interest for monthly period.
-B1: present amount to be considered as negative to get the return in negative.
86
Compound Interest for the following data will be
87
As you can see future value gets the compound interest for the data.

Hope you understood How to calculate compound interest using Future value function in Excel. Explore more articles here on Excel financial function. Please feel free to write your queries in the comment box below. We will help you.

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