How to Create a Quarterly Compound Interest Calculator in Excel

Understanding Compound Interest

Compound interest allows you to earn interest on both the initial investment (the principal) and any previously earned interest.

The generic formula for compound interest is:

Where:

• (FV) is the future value
• (PV) is the present value (initial investment)
• (r) is the interest rate per period
• (n) is the number of compounding periods

Using Excel’s FV Function

Excel has a built-in function called FV that calculates the future value of an investment using a constant interest rate.

The syntax of the FV function is: FV(rate, nper, pmt, [pv], [type]).

• rate: The interest rate per period
• nper: The total number of periods
• pmt: Additional payments (usually 0 for compound interest)
• pv: The present value (negative for investments)
• type: Optional; 0 for end-of-period payments, 1 for beginning-of-period payments

Example Calculation

Let’s assume a $5,000 investment for ten years at a 5% annual interest rate, compounded monthly.

We can use the following formula:

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

Quarterly Compound Interest Formula

To calculate quarterly compound interest, we compute interest four times a year. Each quarter’s interest is added to the principal for the upcoming quarter.

The formula is:

Creating the Calculator in Excel:

Step 1 – Dataset Introduction

Consider a dataset with a principal amount of $10,000, an annual interest rate of 5%, and a total investment period of 10 years.

Step 2 – Inserting the Formula

• In cell C9 (your resulting cell), enter the formula:

Here:

• • C5: Principal amount
  • C6: Annual interest rate
  • C7: Total years of investment

• Press Enter.

Step 3 – Final Output

• Press Enter, and cell C9 will display the future amount (quarterly compound interest), which in this case is $12,820.

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

Step 4 – Customizing Values

Modify the input values (e.g., change the total years of investment) to see how the result changes.

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

Download Practice Workbook

You can download the practice workbook from here:

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