General Compound Interest Principal 1 Annual Interest RateN NTime. The Excel compound interest formula in cell B4 of the above spreadsheet on the right once again calculates the future value of 100 invested for 5 years with an annual interest rate of 4. The formula truly is fairly simple to understand and in my case once I got it I GOT IT.
To introduce number e well use the example of continuous compound interest.
This algebra precalculus video tutorial explains how to use the compound interest formula to solve investment word problems. Lets first review how simple interest works. How the Continuous Compounding Formula is derived The continuous compounding formula can be found by first looking at the compound interest formula where n is the number of times compounded t is time and r is the rate. FV 10000 x 27183 15 x 1 1161834.