If a constant interest rate acts on your investment, you can calculate your returns with a simple formula. You can similarly calculate your returns if the interest rate grows continually or if the interest rate follows a mathematical function. But if the interest revolves between several values, you have to calculate each period's returns individually. A quick way to do this if the investment covers many periods is to use a spreadsheet.
Open a new spreadsheet and type the initial interest rate that acts on your investment in cell A1. For example, if you will earn 0.39 percent in the first month of your investment, type "0.39 %."Step 2
Type successive interest rates in other cells in Row A, starting with A2.Step 3
Type your investment's initial principal in cell B1.Step 4
Type "=B1*(1+A1)" in to cell B2, and then press "Enter" to calculate your investment's worth after one period.Step 5
Click the black square in the lower right corner of cell B2 and drag it downward to extend the formula into lower cells. The spreadsheet now displays your principal for each period in row B.Step 6
Type "=B2-B1" into cell C2 to calculate your returns for the investment's first period.Step 7
Click the black square in the lower right corner of cell C2 and drag it downward to extend the formula into lower cells. The spreadsheet now displays your earnings during each period in row C.Step 8
Type "=B2-$B$1" into cell D2 to calculate your cumulative earnings after the investment's first period.Step 9
Click the black square in the lower right corner of cell D2 and drag it downward to extend the formula into lower cells. The spreadsheet now displays each period's cumulative earnings in row D.
Items you will need
- Spreadsheet software
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