Compound Interest is a crucial part of financial computation that so many of us utilize on a regular basis. Excel has a financial function to calculate the compound interest rate. In this article, we will create a quarterly compound interest calculator in Excel.

**Table of Contents**hide

**What is Compound Interest?**

You can earn interest on your money when you invest it. Earning or paying the interest on money is referred to as compound interest. Actually, compound interest is interest earned from an investment. The generic formula for compound interest is:

**FV = PV(1+r)n= PV(1+r)n**

Where **FV **is the future value, **PV **is the present value, **r **is the interest rate per period, and **n **is the number of compounding periods.

**How to Compute Compound Interest in Excel?**

To calculate compound interest, excel has a built-in function called the **FV **function. The **FV **function evaluates the future value of an investment using a constant interest rate as one of the financial functions. The syntax of the function is **FV(rate, nper, pmt, [pv], [type])**. Letâ€™s have a look at the calculation of compound interest in excel.

The below example assumes that a **$5,000** investment is made for ten years at a** 5%** annual interest rate, compounded monthly. By using the formula below, we get the compound interest paid monthly.

`=FV(C5/C6,C7*C6,0,-C8)`

Here, **C5 **is the interest rate,** C6 **is compounding periods per year, **C7 **is the terms in the year, and **C8 **is the present value of the investment.

**Quarterly Compound Interest Generic Formula**

To calculate the quarterly compound interest we must calculate interest four times a year. Each quarterâ€™s interest will be added to the principal for the upcoming quarter. The formula for determining the quarterly compound interest.

**=Principal Amount*((1+Annual Interest Rate/4)^(Total Years of Investment*4))**

**Creating Quarterly Compound Interest Calculator in Excel**

Creating a quarterly compound interest calculator will help to work faster. By using this calculator you are able to find the compound interest in quarters. All you need to do is just put the input value of yours and it will automatically show the result in the resulting cell.

**Step 1: Dataset Introduction**

For example, letâ€™s just take a look at the following dataset. The dataset contains some information about a banking investment. The dataset has a principal amount of **$10,000**, an annual interest rate of **5%**, and a total year of investment which is **10**. Now we want to calculate the future amount which is mainly our quarterly compound interest.

**Step 2: Inserting Excel Formula for Quarterly Compound Interest Calculator**

We already know about the formula for finding the quarterly compound interest in the above section of the article. So now we are going to put the formula of quarterly compound interest in our resulting cell. Letâ€™s follow the steps to get a clear idea of how the formula works.

**STEPS:**

- Firstly, select the resulting cell. So we are selecting cell
**C9**. - Secondly, write the formula there.

`=C5*((1+C6/4)^(C7*4))`

Here, cell **C5 **indicates the principal amount, cell** C6 **represents the annual interest rate, and cell **C7 **denotes the total years of investment.

- Finally, press
**Enter**.

**Step 3: Final Output of Quarterly Compound Interest Calculator in Excel**

- By pressing
**Enter**the result will show in the resulting cell, in our case the cell is**C9**. As a result, the future amount will show in cell**C9**which is**$12,820**.

- And thatâ€™s it. We are successfully creating a calculator and now we can calculate the quarterly compound interest.

**Read More: **A Daily Compound Interest Calculator in Excel (Template Attached)

**Step 4: Getting Output with New Values**

Now if you change the value, the result will also change. As we change the total years of investment the value decreases. So, you can modify the value as per the requirements.

**Read More:** Reverse Compound Interest Calculator in Excel (Download for Free)

**Download Practice Workbook**

You can download the workbook and practice with them.

**Conclusion**

The above steps will assist you to create a quarterly compound interest calculator in Excel and I Hope this will help you! If you have any questions, suggestions, or feedback please let us know in the comment section.

I am confused at your notation for quarterly compounding! FV= p*(1+ APR/4)*(#years*4)

FV = C5*(1+C6/4)*(C7*4)

(# Years * 4) or (C7*4) should be an EXPONENT,NOT a factor! FV=p*(1+APR/4)^(C7*4)

FV=C5*(1+C6/4)^(C7*4)

This could cause much confusion!

Bob Martray

Math Instructor at NVCC

571-276-8325

Hello, BOB MARTRAY!

Thanks for noticing.

The formula is now updated!