I need to calculate compounding interest. Example I have an account that had
a balance of 40,000 in FY02. The account now has 72,000 at the end of FY07.
I need to calculated what the compounded interest rate was for the time
between 02 and 07.
You can use the rate function which has the following format:
RATE(nper,pmt,pv,fv,type,guess)
If we assume the 40,000 is the end of 02 balance, then the formula is:
=RATE(5,0,-40000,72000,0)
for an answer of 12.47%.
Nper is the total number of payment periods in an annuity.
Pmt is the payment made each period and cannot change over the life
of the annuity. Typically, pmt includes principal and interest but no
other fees or taxes. If pmt is omitted, you must include the fv
argument.
Pv is the present value -- the total amount that a series of future
payments is worth now.
Fv is the future value, or a cash balance you want to attain after
the last payment is made. If fv is omitted, it is assumed to be 0 (the
future value of a loan, for example, is 0).
Type is the number 0 or 1 and indicates when payments are due.
Mike Anas
http://mikeanas.googlepages.com/