How to Calculate Compound Interest in Excel (formula and FV)

Compound interest means interest earns interest. Excel has both the textbook formula and a function that does it for you.

Set up the inputs

The formula (compounded yearly)

=B1 * (1 + B2) ^ B3

Result: 2,15,892. The ^ means “to the power of”.

Compounded monthly

=B1 * (1 + B2/12) ^ (B3*12)

Result: 2,21,964 — more, because interest is added 120 times instead of 10.

With FV (does the same, handles deposits)

=FV(B2/12, B3*12, 0, -B1)

Rate per period, number of periods, payment per period, present value (negative = money you put in).

With a monthly deposit of 5,000 too

=FV(B2/12, B3*12, -5000, -B1)

Interest earned only

=FV(B2/12, B3*12, 0, -B1) - B1

Year-by-year table

A6:A15 = years 1 to 10. B6: =$B$1*(1+$B$2)^A6, drag down. Select and Insert › Line chart to see the curve.

Check it worked

At 8% for 9 years money roughly doubles (rule of 72). 1,00,000 → about 2,00,000 at year 9. Yes: 1,99,900.

Common mistakes

Typing 8 instead of 8%. That is 800%. Type 8% or 0.08.

FV shows negative. You gave a positive principal. Put a minus in front of it, as above.