Questions tagged [compound-interest]
Compound interest is the result of reinvesting interest so that interest in the next period is then earned on the principal sum plus previously accumulated interest.
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401k Calculation Accuracy
Here's the formula I'm working with for forecasting my 401k:
where t is in years, P(0) denotes starting principal, r denotes average annual rate of return, and c_i denotes biweekly contributions I ...
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Different method leads to different result - What is wrong?
In the reference below, the following simple problem is presented:
Bank of Ireland offered a 9 month fixed term reward account paying 2.55% on maturity, for new funds from €10,000 to €500,000. (That ...
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What does the term Discount Rate mean when it comes to Treasury Bonds?
Recently bought a Treasury bond. The bond comes due at par (100) on 1/14/2025. The settlement day for the trade is 9/17/2024. I paid 98.450025 for the bond. On the trade confirmation it said:
YIELD ...
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Continuous compounding only makes big difference at nominally 5+ %
I tried to get a sense of how much difference is makes when a nominal annual interest rate is capitalized multiple times per year, especially as the number of capitalizations approaches infinity, i.e.,...
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How to calculate a mixed interest rate?
I would like to calculate the realized interest rate of my stocks. How can I do that?
Example:
I buy stock A for 1000$ in year 1. After 3 years it is worth 1158$ (+5%/a, 158$ profit)
I buy stock B for ...
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How to calculate the very last payment when repaying a debt?
Suppose I'm repaying a fixed amount every month on a debt such as a credit card debt.
Generally, the very last payment will be less than the others, because the total owed will be less than the fixed ...
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How to evaluate the net profit rate for a pension scheme?
I am not a finance (cse background) guy but have some basic minimal knowledge about the inflation rate & interest rate of a country, and the net profit rate for an investment. As far as I ...
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Confusion with payment calculation for fixed payments on fixed interest loan
I'm trying to understand how to calculate the monthly payments on a fixed interest loan with a given term. I understand this can be done with the PMT excel function.
Whenever I see this explained ...
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Monthly Rate vs Continuously Compounded Rate
A bank offers two alternative interest schedules for a savings account of $100,000 locked in for 3 years. Which alternative should you choose?
(a) a monthly rate of 1%
(b) an annually, continuously ...
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Which mortgage should I pay off first? Same interest rate and mortgage length
tl;dr:
I have two amortized mortgages; one big and one small.
The conditions (interest rate and mortgage length) are exactly the same.
Which should I pay off first?
I have always heard that you ...
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Formula for continuously increasing interest rate
Is there a standardised formula for continuously increasing interest rate of an investment? Given a compound interest formula of A = P(1 + (r/n)^nt), is there a way to combine daily compounding with a ...
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If APY factors compounding (while APR doesn't), shouldn't APY always be higher than APR?
So, from what I understand:
APR: rate advertised to borrowers (without compounding)
APY: rate advertised to lenders (with compounding)
So, for a loan with APR of 6%, that compounds monthly:
APY = (...
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How do we trust power of compounding with mutual fund SIP
When I search for SIP Mutual fund plans, often I see huge money returns in the long run.
But when I research, it's usually mentioned as Power of compounding, that's how they're able to return such a ...
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How frequently is interest compounded when estimating market returns [duplicate]
I'd like to be able to estimate the value of my portfolio over time given annual contributions and an expected return of a certain percentage. I found several simple online interest calculators, but ...
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Calculating CAGR for Ordinary annuity
Basic compounding interest question:
I paid 5000 every month for 12 months and got 67500 in return, what was the annual compounding intereset rate?
I considered formular as follows:
FV = PMT(((1+r)^...
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Need help in calculating interest on daily savings account
Preamble
I would like to open a savings account in one of "Big 5" banks in Canada. Many banks are offering so called "daily savings" accounts.
My calculation
Not to name any names, ...
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What formula has bank used in this situation?
This is the bank fixed deposit's start date and end date with the principal and maturity amounts. The rate is 7% p.a.
Could anyone help with how the bank has calculated this maturity amount?
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How We Decide n in Compound Interest Rate Table When Annual Expenses Increasing After Certain Year?
I don't understand that, in this question's solution for HEPS9, why we take n as 6. And why we use A/G for SP240 and P/G for HEPS9.
Question:
Solution:
Compound Interest Rate Table:
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For mutual funds, does average annual return mean compounded annually or continually or daily?
Vanguard's Portfolio Allocations page (1926-2019) shows 9.21% Average annual return for 70% Equity and 30% Fixed income.
Does this mean 9.21% compounded annually?
GOAL...
If at age full retirement age ...
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How are compound interest factor tables calculated?
In my economics class, our textbook provides these massive tables for looking up these compound interest factors to put in worth equations. They look something like this:
There has to be some formula ...
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How do I calculate monthly compound interest with additional monthly deposits in Google Sheets?
I'm trying to figure out how to write a formula and/or use a function to calculate the following in Google Sheets.
John deposits $1,000.00 into a savings account on Dec 31st. John also deposits $100 ...
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TreasuryDirect Reinvest T-Bills (Gap or no Gap)
When you set a T-Bill (say 3M) to reinvest on TreasuryDirect, will there be a one week gap when reinvesting (due to auction scheduling) or will you be fully vested for 2 years (get 2 year's worth of ...
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How to calculate Average CAGRs?
I have sales by 30 different products over years (2015-2022). I need to compute Compound Annual Growth Rate, however some of the product groups have high CAGR and some of them have quite low CAGR. So ...
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Are there any home-loans that compound every quarter or half-year or annually?
Are there any home-loans that compound every quarter or half-year or annually?
Asking for a friend who keeps bugging my other friend to give them money to buy a house, and the friend doesn't want to ...
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Is this a weekly compounding loan amortization schedule?
I am currently having a disagreement with my colleagues regarding whether a loan is compounding or not.
I have linked below an image of a amortization schedule for a 52 week term for a $50,000 loan. ...
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If you pay off a variable APR daily accruing credit card before the end of the month, is there interest?
Can you avoid 100% of interest on a card that accrues interest daily, by paying it off in full before the end of each billing cycle?
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CAGR of Monthly Close Prices
In step 7 in this tableau tutorial he uses the number of periods as 12 I believe this number should change. So for instance if we started with January to March, the number of period would be 3. Then ...
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Calculating cumulated interest of mortgage within a specific time span
I like to use google sheets because of its ease of access with just a link. I have a mortgage and I need to be able to calculate the interest within a year (but I'd like to be able to do it within any ...
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What's the formula behind these two stock trading scenarios?
Let's say I have $10,000 in my account.
Scenario 1:
If I make 10 trades in a year and each trade I position size using only 25% every time and exit the trade after a 10% gain, my account would grow by ...
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How long will it take to pay off a Virgin Money Transfer principal balance of £ 5,816.21 at 23.29% variable interest?
I'm thick when it comes to finances. I don't understand how interest and compound interest works, so I'm seeking help.
I have a Virgin Money Transfer principal balance of £ 5,816.21.
Interest rate ...
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Financial pros and cons of having a rainy day fund in a savings account versus invested?
I used to have about 4 months of expenses in a savings account as a "rainy day fund" in case of emergencies.
The last year or so, though, I've switched to having a minimum of expenses (about ...
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Calculate interest rate APR (compound and normal) on a daily basis
Let's assume there is an interest rate of 0.61%. So, the interest is 0.61% AER which is then divided by 365 and paid daily. The interest rate is for the year, not per day however interest is paid ...
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Calculating Effective Annual Interest Rate & Annual Percentage Rate with fees (in R)
Problem
How to calculate Effective Annual Interest Rate (EAR) and Annual Percentage Rate (APR) with fees (in R) ?
I am interested in getting to know how much I am actually paying interest when fees ...
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How to find CAGR from absolute return in a given duration?
What is the formula to figure out "Compound Annual Growth Rate (CAGR)" from absolute returns?
Say, if 100% is the absolute return in 5 years tenure, then how would I find what is the CAGR ...
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Calculate APY given start balance, end balance, and term
I'm having trouble figuring out the formula for calculating APY given a starting balance, ending balance, and term in length of years. What's the formula to do this?
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Handing multiple people pooling money into a crypto that compounds
This might be an odd one, but I’m looking for some advice. I have a few people wanting to pool money together into a crypto that compounds.
I’m looking for a good way to record the percentage that ...
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Finding optimal balance between unscheduled mortgage loan replayments and financial market investments
Imagine the following situation.
You have a mortgage loan, it has a quite low fixed interest but runs over a couple of decades
You have positive experiences over a couple of year with the financial ...
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Future value of an annuity with variable compounding time?
I haven't found any information on this so here goes: Is there any general formula for calculating future value of an annuity (recurring deposit) when the interval of interest compounding is variable? ...
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Calculating APY and compounding rates of investment on Coinbase
So I have been working on determining which is better: the Coinbase apy seen in coins such as DAI (2%), and Algorand (4%) and a bank's apy, say 0.6%. I have the calculations in Matlab, but wanted to ...
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How do I calculate Compound Interest with changing monthly contributions, quarterly contributions, and changing interest rate
John currently has $100 in a saving account that compounds quarterly at a .25% interest rate. When the account's balance reaches $2500 or more, the interest rate will change to .05%. I want to figure ...
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Formula for "How long until balance 0" with compound interest and withdrawals?
I an looking for a formula which returns "n" for a given combination of
Starting balance (1M)
Withdrawal rate per year (80k)
Expected interest (8%)
I looked around but couldn't find a ...
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Calculating daily yields with a different compounding interest
For simplicity's sake, suppose I have an investment that earns 1% daily return on average.
The following day, that 1% earning is immediately rolled over into an account that earns 10% yearly ...
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Compound Interest Problem [closed]
Vanessa decides to invest R 140,000 into an account earning 13.5% interest per year, compounded quarterly. This new account allows her to withdraw an amount of money every quarter for ten years after ...
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How does the continuously compounded interest formula work in terms of months?
The continuously compounded interest formula is:
Pe^rt
Where:
P = Principle
e = 2.718...
r = Annual interest rate
t = time in years
If instead of an annual interest rate, I got a monthly interest ...
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Calculating real rate after taxation - is there a better way?
First I need a sanity check for my calculations.
Say I have this scenario:
Nominal Rate (per year) [r]
13%
Inflation Rate (per year) [i]
5%
Initial investment [x]
$ 100.00
Time (years) [t]
10
Tax ...
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Do I make more money if I combine 2 VTI investments (me and my spouse) into one investment?
Myself and my wife own some VTI ETF. I own more and she owns less.
We are planning to make some additional monthly investments into VTI.
Question -- Which account should we put more VTI in, mine or ...
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calculating stock investment return
Please help. I am stuck. I am still pretty new to investing, so please be nice and a simple explanation is much appreciated. I want to calculate the capital gains (NO DIVIDEND) annual return of a ...
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How best to maximise the compounding effect of vanguard investing platform?
I have recently put 2K into the vanguard life strategy 100% fund, which is a pre diversified fund of funds. I also drip feed this account monthly. Now I’m putting another 2K from savings into vanguard ...
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Is a bunch of debt now better than distributed debt in the future in terms of paying less in the long run?
This might be too theoretical but it popped into my head this concept for attending University/College. If you had the ability to choose one of the following which is best in terms of you paying ...
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Google Sheet formula for annualized returns - doubts
I'm trying to setup a calculator in google sheets where I calculate the future value of investing for example:
a principal of 10.000
into which I deposit 1.000 every month
the investment doesn't give ...
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