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Savings Interest Calculator


The spreadsheet below is a savings interest calculator. It works out nominal and effective interest rates. You have to know your initial investment which amounts to a known total (final or future) value in a specified period of time.


The Nominal Interest Rate is
based on the following formula:		 The Effective Interest Rate is calculated by the following formula:
nominal interest rate formula effective interest rate formula

where:

P = initial investment
T = future value
N = number of compounding periods per year
Y = number of years
i = nominal interest rate
eir = effective interest rate

Note that the number of compounding periods per year is not needed to calculate the effective interest rate.


Example:


Mr. Hegel invests the modest amount of $10,000 in a savings bank. Five years later his investment amounts to only $16,200. What is the effective interest rate offered by his bank? If interest is compounded monthly, what is the nominal interest rate offered?

This is a job for our very useful savings interest calculator... We just have to fill in the blanks...

Initial Investment = 10,000
Final Value = 16,200
Number of years = 5
Nr. of Compounding periods  / yr = 12

and the results are

Nominal Interest rate =     9.687%
Effective Interest rate =     10.129%


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Enter the needed values...
(do not use commas)

Initial Investment:
Final Value:
Nr. of years:
Nr. of compoundig periods per yr:

Nominal Interest Rate: %
Effective Interest Rate: %



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