rray0032 said:
What is the formula to enter to obtain for example
the yearly or monthly interest earned on an account
with an opening deposit of $1000.00 that has an APY
of 2.9% and is compounded daily with the interest
credited on a monthly basis?
Do you really mean APY, or is 2.9% the nominal annual
interest rate?
If it is the nominal rate, arguably the simplest formula is
one of the following, depending on the term of the savings
account:
=FV(2.9%/365, years*365,, -1000) - 1000
=FV(2.9%/365, months*30,, -1000) - 1000
=FV(2.9%/365, days,, -1000) - 1000
Note the double-comma before -1000. Also note that
the "months" formula is the least accurate, since it
assumes an average of 30 days per month (360 days
per year).
If 2.9% is truly the APY, the daily compounding factor
is already incorporated and 2.9%/365 would overstate
the daily interest rate. Replace 2.9%/365 with
RATE(365,,-1,1+2.9%).
Arguably, RATE() complication is not worth the trouble.
It makes a difference of less than $2.40 in interest over
5 years and less than $29.30 over 30 years per $1000
principle -- 1.5% to 2.2% respectively.
