# 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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### 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 ...
1 vote
240 views

### 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 ...
1 vote
195 views

### 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 ...
33 views

### 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 ...
1 vote
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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 ...
202 views

### 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 ...
234 views

### 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, ...
6k views

### 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 ...
1 vote
103 views

### 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 = (...
7k views

### 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 ...
2k views

### 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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### 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 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 ...
327 views

### 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 ...
1 vote
100 views

### 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? ...
1 vote
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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)^...
216 views

### Are Offset Accounts OR Paying of Mortage Going to Give Me a Better ROI

I've been looking into my finances lately (I am an armchair finance person). And it looks to me, that my return on investment isn't going to be the same, if for example, I put \$12000 in an offset ...
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2k views

### How to deal with February in accrued interest calculation (30/360 day count convention)

How would you deal with the month of February in a daily interest calculation on a loan that compounds monthly? I would think that with 30/360 day count convention, each day in February results in ...
142 views

### 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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### How do I determine the performance of my retirement fund with regular monthly contributions?

My retirement fund [Australian Superannuation fund] can be checked at any time. The fund invests in shares, which can go up - or down. Money is going IN regularly [monthly]. At any given time, how do ...
1 vote
2k views

### 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 ...
137 views

### 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 ...
114 views

### 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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### Annuities question - Equations of value

Chuck needs to purchase an item in 10 years. The item costs 200 today, but its price inflates at 4% per year. To finance the purchase, Chuck deposits 20 into an account at the beginning of each year ...
1 vote
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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. ...
2k views

### Compound Interest Formula With Monthly Investment Increase

I'm looking to solve this problem: If I were to start investing now, With a 4% annual return compounded monthly what is the function for my return if my monthly input is initially \$2000 then for ...
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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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### 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 ...
1 vote
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### Can I renegotiate desirable rates and terms on a paid-off credit card?

I would like to keep and use my business credit card, but I do not need it. I paid off around \$10k today which took my balance to zero, now that my 0% introductory rate has ended. (The card is around ...
185 views

### 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 ...
138 views

### Am I using the right method for this compound / simple interest problem with annual deposits?

I am trying to solve the following exercise: A bank account is opened at the beginning of the year 2013 by making a one-off deposit of £1000. A further deposit of £200 is made at the beginning of each ...
1 vote
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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 ...
580 views

### 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 ...
331 views

### 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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1k views

### 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 ...
1 vote
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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 ...
452 views

### 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 ...
64 views

### 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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### 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 ...
844 views

### 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 ...
2k views

### 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 ...