1. I have setup a workbook to calculate the interest on a compounding basis. The capital lent is 45000

Is there a better way of setting this up to compound the interest? If so kindly amend the attached spreadsheet

Your assistance will be most appreciated

2. Howard,

I have some questions.
1. Is there a reason the dates are not sequential? Rows 3-4
2. Is there a reason you are using a 365 day year? When I was in school (admittedly a long time ago) we were taught that most loans were calculated on a 360 day year (12 - 30 day months).
3. Why is the first date in European format? Row 2
4. What is your compounding period? None, Daily, Monthly, etc.

RG

3. Hi RG

1) The dates are not sequential as there have been interest rate changes for eg on 24/05/2006 the rate was 10.50% and changed on 08/06/2006 to 11.00%
2) There is no reason I used 365 days to calculate Int -360 days would be fine
3) In my country we use date format dd/mm/yyyy
4) the compounding period would be daily

Hope this clarifies the situation

Regards

Howard

4. Howard,

However, I still have a problem with your date sequence as I read it Row 3 is Jun 8 2006 and Row 4 is Mar 8 2006? Unless I am reading what you are trying to do wrong the dates should be in order so you can calculate the interest every time the rate changes and then adding it to the previous balance.

Your current formula calculates the simple interest for the period of days calculated. The link above will allow you to compound the interest daily.

I hope this helps.

RG

5. Howard, I think you will find these formulas calculate correct daily compounds on a 360 basis (in case 360 days is only a US convention, replace 360 with whatever is correct for your country):

Cell E2: =A2*(1+C2/360)^D2-A2
Cell E3: =F2*(1+C3/360)^D3-F2
Copy cell E3 down for all subsequent periods.

(Apologies that I couldn't get to this earlier.)

6. Hi John

Thanks for the help, much appreciated

Regards

Howard

#### Posting Permissions

• You may not post new threads
• You may not post replies
• You may not post attachments
• You may not edit your posts
•