Interest Formula Help!

[Ant]

Hey guys

Does anyone know how banks calculate interest?

Lets say I have a Savings account with
$10,000
Interest =1.01%
Days=365
And days are based on a specific month

((10000*1.01%)/365))*30
First. is this the correct formula?

Second.. This formula works great if I don't make a
deposit

Lets say I make a few deposits in a month like 200.89
and 34.99

How can I make this in to an excel formula?

What I'm thinking is using a v-look on the months

Any ideas?

 

[Norman Harker]

Hi Ant!

You must understand your rate quote first.

If it's annual nominal compounded monthly (APR12) you use the daily
rate:

=(1+APR12/12)^(12/365)-1

If it's annual nominal compounded daily (APR365) you use the daily
rate:

=(1+APR365/365)^365-1

If it's the annual effective you use the daily rate:

=(1+AnnEff)^(1/365)-1

Then to compound any amount you can use:

=AnyAmount*(1+DailyRate)^Days