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8-14 Compound Interest CH 8]

Balance) blank for now.

 In our example, principal = $3,000, interest rate = 6% or 0.06, Interest Rate
Periods 30, Number of years 1, Number of Days in year 365.

3. Click on cell B6 to select it and then click inside the formula bar to enter this
equation: =B1*(1+B2/B5)^(B3*B4) and press the enter key of the keyboard. The *
character tells the computer to multiply and is found above the 8 key on your keyboard;
you press down and hold the shift key and then tap the 8 key to get the *. The ^ key
(carrot key) is the exponent character or “raise to the power” the numbers. The ^
character is found above the 6 key and is the mathematical exponent in the calculation.
To get the exponent character ^ you press down and hold the shift key and then tap the 6
key. Once this equation is entered, Compounded Interest can be calculated daily, and you
will note that the total principal and interest earned balance is $3014.83 after 30 days
with the year being 365 days, the same as you have already calculated. You can see that
it is a good idea to reinvest your interest earned.

4. You can change the numbers in column B rows 1-5 to fit your calculations and it will
adjust the value with each change. So, save this Program to your computer for later use
as Compound Interest.

5. Note that the algorithm with your hand calculator is different than the algorithm with
the Excel worksheet.

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