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Need help with calculating a compounding value

  1. #1
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    Need help with calculating a compounding value

    I posted the following yesterday and was provided some excellent help:

    Here is what I'm trying to do with a Excel formula. I need to add simple inflation percentage for a single year to a value, for example, if the value is 1000 and the inflation percent is 10, the value after one year is 1100. But I need to continue adding only the same percent to that value to provide a cumulative total. For example, after the second year the total would be 1100 plus 1200 (1100 + 100), which equals 2300. After the third year the total would be 1100 + 1200 +1300, which equals 3600. The number of years is determined by an input field, as is the inflation rate. I desperately need help in making this type of calculation.

    The reply that worked best gave me the following formula:

    A1 = initial value
    A2 = inflation percent
    A3 = num of yrs
    A4 = A1*A3+COMBIN(A3+1,2)*A2/100*A1

    Now, I'd like to take it a step further and calculate compounding. I added this post to my previous thread, but I'm afraid since it was already answered, it got lost:

    Not to get greedy, but I was also wondering if anybody could help me with a formula that would calculate annual compounding on my original example. For example, instead of simply adding the same amount each year that was based on the original amount (100 in my example), I'd like to be able to add the percentage of the current year.

    Hopefully, the following will make it clearer. On the 1000 amount and 10% interest I used in my example, here's what I'd like the values to be. After 1 year, the value would be 1100, then the second year would add 10% to that value, then add the total: 1100 + 110 = 1210 + 1100 = 2310. The third year value would be 1210 + 121 = 1331 + 2310 = 3641, etc. Again, any help on this is greatly appreciated.

  2. #2
    Forum Expert shg's Avatar
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    =1000*(1 + 10%)^N where N is the number of years
    Entia non sunt multiplicanda sine necessitate

  3. #3
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    This formula gives me the amount for each year, but I need a cumulative total of all the amounts for a given year. In my example, I need to formula that returns 2310 for year 2, and 3641 for year three. Thanks in advance for your help.

  4. #4
    Forum Expert shg's Avatar
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    =amt * ((1 + int) ^ (N + 1) - 1) / int

    ... where amt is the initial amount, N is the number of periods, and int is the compounding rate, e.g.,

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  5. #5
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    This formula works great with one exception. If I try to calculate without using a compounding rate, which will need to be done in some cases, it results in a division by 0 error and does not let me calculate the cumulative totals by year with zero interest.

  6. #6
    Forum Expert shg's Avatar
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    =if(int=0, (N+1) * amt, ~)

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