Article ID: 214150
Article Last Modified on 1/24/2007
APPLIES TO
- Microsoft Excel 2000 Standard Edition
- Microsoft Excel 97 Standard Edition
- Microsoft Excel 95 Standard Edition
- Microsoft Excel 95a
- Microsoft Excel 2001 for Mac
- Microsoft Excel 98 for Macintosh
This article was previously published under Q214150
SUMMARY
The compounded period used by Microsoft Excel in calculating financial functions can be altered by changing the number of periods over which the function is calculated. For example, a four-year loan compounded monthly has 48 periods (4 years times 12 months). You need to type the rate as the rate for each period.
To calculate a 9-percent annual interest rate, compounded monthly, type the monthly interest rate, which, in this example, is .75 percent (9 percent divided by 12 months).
As an example, when you calculate the future value of $10,000 four years from now at an annual interest rate of 9 percent, Microsoft Excel returns the following results:
Compounded Period Formula Result
----------------- ------- ------
yearly =FV(9%,4,,-10000) $14,115.82
quarterly =FV(9%/4,4*4,,-10000) $14,276.21
monthly =FV(9%/12,4*12,,-10000) $14,314
daily =FV(9%/365,4*365,,-10000) $14,332.66
MORE INFORMATION
This information regarding the number of periods is true for all of the financial functions that take a percentage rate as an argument. The following is a list of those functions:
FV()
IRR()
IPMT()
MIRR()
NPER()
NPV()
PMT()
PPMT()
PV()
RATE()
Additional query words: xl2k xl2000 XL2001 XL98 XL97 XL7
Keywords: kbhowto KB214150
