Compounding 360 How to Calculate APY With Ease
Calculating an investment’s APY can be
5.13% Try pasting this formula into any cell on
In the example I’ve used, you’ll find th
e APY With Ease
estment’s APY can be tricky. If you want to just find out what an APY is with Excel, here's the function:
1/B1)),B1)-1 where A1 is the Rate and B1 is compounding frequency.
rmula into any cell on a spreadsheet (except A1 or B1). In cell A1 you’ll put the stated annual interest rate – in
ve used, you’ll find that the APY is 6.183%. In other words, if you get 6% annually with daily compounding, you
here's the function:
ed annual interest rate – in decimal format. For example, if the stated annual rate is 6%, you’ll type “.06” in ce
with daily compounding, your APY = 6.183. Try changing the compounding frequency and you’ll get an idea of h
s 6%, you’ll type “.06” in cell A1. Then, you put the number of times you’ll compound each year . For example,
y and you’ll get an idea of how the APY changes. For example, you might show quarterly compounding (4 times
nd each year . For example, for daily compounding you’d enter “365” (or 360 depending on the institution) in ce
terly compounding (4 times per year) or the unfortunate 1 payment per year (which just results in a 6% APY).
ding on the institution) in cell B1.
h just results in a 6% APY).