Calculate monthly compound interest in Excel
Do you think you have to learn another new compound interest formula for that?
Not at all 🤗
The monthly compound interest formula and the daily compound interest formula are the same.
The only difference is that the number of compounding periods per year is now 12.
Due to that, it gives 2 different compounding interest values.
Now, change the compounding periods to 12 and use the same compound interest formula.
Future value with the monthly compound interest rate is ready 😍
You can calculate compound interest on monthly compound interest from this too.
You need to do only 2 changes for the FV function of the annual interest rate here.
- Convert the annual interest rate to the relevant intra-year period compound interest rate.
So, divide the annual interest rate by the compounding frequency per annum.
As the interest is compounded monthly here, use the monthly interest rate.
- If the interest is compounded quarterly, use the quarterly interest rate.
- If the interest is compounded daily, use the daily interest rate.
- Multiply the number of periods by 12.