COMPOUND Function

Returns compound interest parameters

Category: Financial

Syntax

COMPOUND ( a,f,r,n )

Arguments

a

• is numeric, the initial amount.

• Range: a ‰

f

• is numeric, the future amount (at the end of n periods).

• Range: f ‰

r

• is numeric, the periodic interest rate expressed as a fraction.

• Range: r ‰

n

• is an integer, the number of compounding periods.

• Range: n ‰

Details

The COMPOUND function returns the missing argument in the list of four arguments from a compound interest calculation. The arguments are related by

One missing argument must be provided. It is then calculated from the remaining three. No adjustment is made to convert the results to round numbers .

Examples

The accumulated value of an investment of $2000 at a nominal annual interest rate of 9 percent, compounded monthly after 30 months, can be expressed as

 future=compound(2000,.,0.09/12,30); 

The value returned is 2502.54. The second argument has been set to missing, indicating that the future amount is to be calculated. The 9 percent nominal annual rate has been converted to a monthly rate of 0.09/12. The rate argument is the fractional (not the percentage) interest rate per compounding period.