## Daily Compound Interest Formula in Excel

The basic compound interest formula is shown below:

**Current Balance = Present Amount * (1 + interest rate)^n**

**n** = Number of periods

Consider an investment of $1,000 for 5 years with an interest rate of 5% compounded monthly.

The monthly compound interest will be:

The daily compound interest will be:

## Step by Step Guide for Creating a Daily Compound Interest Calculator in Excel

Our dataset contains some basic information necessary to calculate the daily compound interest.

We are using this formula:

**Compounded Amount=Initial Balance* (1 + Annual interest rate / Compounding periods per year) ^ (Years * Compounding periods per year)**

**Steps**

- Insert the following formula in cell
**C9**:

`=C4*(1+C5/C6)^(C7*C6)`

- Press
**Enter**.

- To calculate the Gained Interest, use the following in cell
**C10**:

`=C9-C4`

- Press
**Enter.**

**Read More: **Create Reverse Compound Interest Calculator in Excel

## Test the Calculator for Daily, Monthly, and Yearly Compounding Periods: An Example

Suppose you want to invest $10000 for ten years somewhere. You have three options:

`Bank "X" is providing 5% interest compounded yearly`

.`Bank "Y"`

`is offering 5% interest compounded monthly.`

`Bank "Z" is giving 5% interest compounded daily.`

Let’s use the calculator to find which one will provide you with most benefits.

**Computing Yearly Compound Interest:**

Here, we are using this dataset to demonstrate all the examples:

**Steps**

- Use the following formula in cell
**C9**:

`=C4*(1+C5/C6)^(C7*C6)`

- Press
**Enter**.

- To calculate the Gained Interest, use the following in Cell
**C10**:

`=C9-C4`

- Again, press
**Enter.**

**Computing Monthly Compound Interest:**

**Steps**

- Use the following formula in Cell
**C9**:

`=C4*(1+C5/C6)^(C7*C6)`

- Press
**Enter**.

- To calculate the Gained Interest, use the following in cell
**C10**:

`=C9-C4`

- Again, press
**Enter**.

**Computing Daily Compound Interest:**

If we calculate interest for Bank “Z”, it will show the following:

**Related Content: **Make Quarterly Compound Interest Calculator in Excel

## An Advanced Excel Function to Find the Compound Interest

**Syntax**:

**=FV (rate, nper, pmt, [pv], [type])**

**Arguments**:

**rate: **Required. The interest rate for each period.

**nper: **Required. The number of compounding periods.

**pmt: **Required. The additional payment per period, and is represented as a negative number. If there is no value for “pmt,” put a value of zero.

**pv: **Optional**. **The principal investment, which is also represented as a negative number. If there is no value for “pv,” you must include a value for “pmt.”

**type: **Optional**. **Indicates when additional payments occur. “0” indicates that the payments occur at the beginning of the period, and “1” indicates that the payments are due at the end of the period.

We’ll use the same simple dataset.

**Steps**

- Use the following formula in Cell
**C9**:

`=FV(C5/C6,C7*C6,0,-C4)`

To acquire the rate (which is the period rate) we use the annual rate/periods or **C5/C6**.

To get the number of periods (**nper**), we use the (term * periods) or **C7 * C6**.

There is no periodic payment, so we use zero.

The current value (**pv**) is input as a negative value, since the $10,000 “leaves your wallet” and belongs to the bank during the period.

- Press
**Enter**.

**Download the Template**

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Everything you have here makes sense, but what if the loan doesn’t have a specific term? It gets paid off whenever it gets paid off.

Hi

Laurie!It feels good to know that you found our content understandable. Judging from you query, I think you want a continuing compound interest formula where the loan doesn’t have a specific term/year.

The term continuous compound interest is used to emphasize the continuous compounding of interest, as opposed to discrete compounding periods. Here, the compounding frequency becomes infinite, resulting in a continuous growth formula. Let us look at the formula below:

A=P_{0}e^{rt }Where,

For example, if you invest $1,000 at an annual interest rate of 5% continuously compounded for 2 years, the future value can be calculated using the continuous compounding formula.

Regards,

NafisExcelDemy