In the formula A represents the final amount in the account that starts with an initial principal P using interest rate r for t years. The value after 2 years will be 360639. If the interest on your investment is paid monthly while being quoted as an annual interest rate the Excel compound interest formula becomes.
How to use the compound interest formula.
Step 2. There are other types of questions that can be answered using the compound interest formula. Monthly compounding is calculated by principal amount multiplied by one plus rate of interest divided by a number of periods whole raise to the power of the number of periods and that whole is subtracted from the principal amount which gives the interest amount. A is the total amount of money including interest after n years.