compound sum interest factor function?

[joeleandri]

Trending performance may be performed by calculating
compound sum interest factors to generate growth rates.
Using the sample data,one can calculate growth rates for
sales and net income for multiple periods.

To compute, divide the last-period figure by the first-
period figure. This returns a compound sum interest
factor. Then by referring to the compound interest table,
(number of periods & interest factors) one can determine
the growth rate represented by the ratio.

To determine the answer, one looks to the top of the
compound interest table (where rates are displayed) to
identify the compound interest rate which corresponds with
the interest factor.

My question for this excel worksheet function newsgroup
is -- does excel have a function that computes the
compound interest rate that corresponds to the computed
compound sum interest factor? Final answer I am looking
for is a compound interest rate. Thanks. jl

 

[A.W.J. Ales]

Joeleandri,

Look at the function RATE (financial functions)

--
Regards,
Auk Ales

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[joeleandri]

Auk Ales

The 2nd required field in the RATE function, PMT, is the
payment made each period and cannot change over the life
of the loan or investment. I am not making any payments.

Basically, all I'm trying to do is calculate the compound
interest of a security from a beginning period to an
ending period. Seems straight forward, what am I missing?
Thanks for replying. jl

 

[A.W.J. Ales]

If you make no payments you fill in a value of 0.
The intrestrate then "connects" the Present value ( PV) and the Future Value
(FV).

For instance : RATE(10;0;-10000;15000;1) = 4,138...% meaning that : 10000 *
(1+0,04138..)^10 = 15000

10000 is taken negative because the convention is followed that outgoing
money ( for instance an investment) is negatieve and incoming money ( the
result after - in this example - 10 years) is positive.

(NB 10 years is not actually true ; it's more accurate a period of 10
intervals with - in this example - 4,138...% intrest per interval)

--
Regards,
Auk Ales

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[A.W.J. Ales]

On second thought : The answer I gave IS correct. However if no annual
payments are involved you can as well derive from the formula :
(1+rate/100)^N = FV / PV a more direct formula :

Rate = e ^ ( ln (FV / PV) / n ) * 100%

--
Regards,
Auk Ales

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* I will not react on unsolicited e-mails *

 

[A.W.J. Ales]

Sorry : Formula should be : Rate = [ e ^ { ln (FV / PV) / n } -1 ] * 100%


--
Regards,
Auk Ales

* Please reply to this newsgroup only *
* I will not react on unsolicited e-mails *