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How to calculate compound interest in Excel and Google Sheets
Topic:Finance basicsExcel & Google Sheets
=A2*POWER(1+B2, C2)✓
Verified example
Computed by a real spreadsheet engine on the sample data below.
| Principal | Rate | Years |
| 1000 | 0.05 | 3 |
=A2*POWER(1+B2, C2)→1157.625
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Step by step
- 1A2 is the principal, B2 the rate per period (0.05 = 5%), C2 the number of periods.
- 2POWER(1+B2, C2) is the growth factor over all periods.
- 3Multiplying by the principal gives the future value.
Tips
- For monthly compounding, use the monthly rate (annual/12) and months as the period count.
- Subtract the principal (=A2*POWER(1+B2,C2)-A2) to get just the interest earned.
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Frequently asked
How do I handle monthly compounding?
Divide the annual rate by 12 for B2 and use the total number of months for C2.
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