rog said:
calculat earnings on savings. what would be the yearly earnings for a
person
with $6.000 dollars annual interest rate of 5.5%. Show calculated fomrula
Depends on the compounding frequency and how the 6000 is invested (lump sum
at the beginning, or periodically). Also note that the amount is not the
same each year, if there are no withdrawals.
Simplest case: 6000 invested at the beginning at 5.5% compounded daily for
one year in a 365-day year. Then the ending balance is:
=FV(5.5%/365, 365, 0, -6000)
The key to using Excel financial functions is: outflows and inflows should
have opposite signs, plus or minus. Which is positive is arbitrary; it
depends on your point of view (saver v. bank). I choose a point of view so
that the function result is positive. Thus, in this case, the investment is
negative (outflow), and the ending balance is positive (inflow).
If you truly want to know earnings, not ending balance, simply subtract
6000, to wit:
=FV(5.5%/365, 365, 0, -6000) - 6000
