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How to Convert Monthly Interest Rate to Annual in Excel

Frequently, we accrue interest on savings accounts or pay interest on loans. This post will walk you through two straightforward Excel procedures to convert monthly interest rate to annual.

We shall use a sample dataset as an example to show. The information below shows the monthly interest rate of a private bank during the period of the last ten years.

Before starting the article, let’s have an overview of the final output you are going to get.

Overview to Monthly to Annual Interest Rate Conversion


Download Practice Workbook

You can download and practice the dataset we used to prepare this article.


2 Methods to Convert Monthly Interest Rate to Annual in Excel

Let’s assume we have a dataset, namely “Monthly Interest Rate of J.P. MORGAN PRIVATE BANK in last 10 years”. You can use any dataset suitable for you.

Dataset

Here, we have used the Microsoft Excel 365 version; you may use any other version at your convenience.


1. Convert Simple Monthly Interest Rate to Annual by Simple Multiplication

In this section, we are going to show you how to convert monthly interest rate to annual interest rate in case of simple interest. Here, we only need to use the multiplication operator. No additional functions are needed.

Steps:

  •  Firstly, go to cell E5 and type the following formula:
=C5*D5

Monthly to Annual Simple Interest Formula

NOTE: Here, the “*” sign indicates the multiplication function.

  • Next, press ENTER to get the result.

Monthly to Annual Simple Interest Result

  • Finally, place the cursor at the bottom right corner of cell E5, left-click on it and drag the cursor down to cell E14. You will get the calculated result for the rest of the years too.

Monthly to Annual Simple Interest Autofill

 


2. Convert Compound Monthly Interest Rate to Annual with Help of POWER

At this point, you are going to learn to carry out the same task in case of compound interest. Here, you will need to use summation, subtraction, multiplication & division, operators, parenthesis, and the function named POWER.

Steps:

  •  First of all, move to cell E5 and insert the following formula:

=(POWER((1+D5/100),12)-1)*100

                                                      Formula Breakdown

  • D5/100 → becomes
    0.11/100 → 0.0011
  • 1+D5/100 → becomes
    1+0.0011 → 1.0011
  • (POWER((1+D5/100),12) → becomes
    (1.0011)12 → 1.0133
  • (POWER((1+D5/100),12)-1) → becomes
    1.0133 – 1 → 0.0133
  • (POWER((1+D5/100),12)-1)*100 → becomes
    0.0133*100 → 1.33

Compound Interest Formula

  • Afterward, press ENTER to get the expected result.

Monthly to Annual Compound Interest Result

  • Lastly, repeat the task of step 3 from method 1 to obtain the rest of the results.

Monthly to Annual Compound Interest Autofill


Things to Remember

  • You always have to be very careful regarding the interest period conversion. (Whether simple or compound)
  • Carefully use parentheses where they are needed in case of a relatively large formula.

Conclusion

Now, you have the ability to Convert the Monthly Interest Rate to Annual Interest Rate in Excel for both simple and compound interest. Use them whenever you need and let us know if you have any better or additional way to carry out the task. You can drop any comment in the comment section below if you have any queries.

Md. Nafis Soumik

Md. Nafis Soumik

I am Md. Nafis Soumik. I am a Naval Architecture & Marine Engineering (NAME) graduate from Bangladesh University of Engineering & Technology (BUET). My hobby is to listen and create music along with backpacking. My career goal is to pursue higher education eventually. I always attempt to learn from many sources and try to come up with creative answers.

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