Financial Math Calc Help Needed

[amagoh]

I need serious help with a monthly compound interest formula.

I've been up and down the web with no luck. All I've found is a yearly compound interest formula with no option for monthly calculations. I can do it manually, but its laborious and time-intensive.

What I'm doing right now

Compound Interest Calc

Initial Investment (2781.51)=A

Compound Interest % APY 1.25

Compound Interest Decimal (0.0125)=B

Initial Return (2816.278875)=C

2nd Month (5632.992361)=D

3rd Month 8484.914765

4th Month 11372.4862

5th Month 14296.15228

6th 17256.36418

7th 20253.57873

8th 23288.25847

Initial Formula (A*B)+A=C

2nd Month Formula (C*B)+C+A=D

As you can see, it is possible to brute force it. What I want is the formula to allow me to input an initial set value (A), get monthly interest on it (B) and then reinvest that amount (C) and re-run the formula with another monthly investment (A).

The tricky part is the addon monthly investment (A) per every month. There exist formulas for calculating a yearly total of an initial investment,

FV=PV*(1+i)^n

FV=Future Investment, PV=Initial Principal (A), i= interest rate (B), and n= number of months.

Can anybody help, or point me in the right direction? I'd figure I'd start here.

 

[pureinheart]

@amagoh You use the formula you looked up

FV=PV*(1+i)^n

In your note n="number of periods" not monthly. Since your i (interest) is annual your calculating n years, not months.

But if you want to calculate monthly compounding, you divide the i by 12. n becomes the number of months you want to calculate. If you want to do daily, divide i by 365, etc.

So:

FV=PV*(1+i/12)^n where n is the number of months and i is the annual interest rate.

 

[amagoh]

@pureinheart But the problem with the formula is that it only calculates the initial investment, and assumes that there is no other investment during the n period.

I can calculate the compound interest over a course of n period with a single investment just fine.

FV=PV*(1+i/12)^n returns FV

For simplicity sake

=1000*(1+.00125/12)^12

Returns 1012.57.

I now need to re-calculate the interest along with a new monthly investment of 1000.

my new formula is =(1012.57+1000)*(1+.0125/12)^12

returns 2037.87.

and my 3rd formula is =(2037.87+1000)*(1+.0125/12)^12

returns 3076.07

rinse and repeat

I need a formula that re-calculates a monthly investment of that 1000 (x) and recalculates the monthly interest based on the new about, repeating n periods of times.

Or am I going about this wrong?

 

[helpabroout]

@amagoh

Or am I going about this wrong?

I think so. There are many savings calculators on the internet that are ready to do what you want for free at a moment's notice.

How about this one.

Unless you're trying to add it to a spreadsheet or something? Even then, I think you could find a savings calculator and just copy the formulas.

 

[kalashnikovmage]

@amagoh I don’t know if there is an actual formula for what you want with regular contributions. Instead you have to run a program/script.

I use the Ez Financial Calculator App on my iPhone. Or you could use the FV function in Excel.

I highly recommend the EZ Financial Calcular. Lots of other useful features in it (Loans, ROI, etc). It says it has an Android app and there website is http://www.fncalculator.com

Edit: app updated. Don’t use a negative number for payments.