Annualised interest rate

[Linda Adams]

Is it possible to work out an annulised interest rate of a savings plan
given that I have the following data:

1. annual premium
2. number of years (i.e. premiums)
3. anticipated future value

I know how to find out the Average Growth Rate of an investment (MS KB
article 123198) but this assumes that a lump sum investment has been made at
the start of the period. How can I calcualte what the anticpated growth on
an investment plan with annual premiums is?

Linda Adams

 

[JE McGimpsey]

Check out the RATE() function in XL Help:

For instance, if you have an annual premium of $100 for 4 years, with an
anticipated future value of $450, you could use

=RATE(4,-100,0,450,1) ===> 4.77%

Using the 1 as the fourth argument assumes that you pay in advance, and
that the FV is at the *end* of the 4th year.

 

[Linda Adams]

Many thanks - works perfectly. I felt sure the answer was staring me in the
face!

Linda Adams