You will need to prepare a calculation for each alternative in order to complete your comparison.
Popular spreadsheet programs include Microsoft Excel and iWork Numbers. You can also find free spreadsheet applications online such as Google Docs or Zoho Sheet.
The interest rate is usually shown as an annual figure; it will need to be divided by 365 in order to reach the daily interest rate. For example, if your principal to invest is $10,000, and your savings account is offering . 5 percent interest, you will enter “10000” in cell B1 and “=. 005/365” in cell B2. The number of periods determines how long your investment will remain in the account untouched, except for the compounding interest that is added. You can use a sample term of one year, which will be entered in cell B3 as “365. "
Type “=IPMT(B2,1,1,-B1)” in the formula bar. Press the Enter key. The daily interest earned on this account, for the first month, is $. 1370 per day.
An annual percentage rate of . 5 percent or . 005, when divided by 365, is equal to . 00137 percent, or . 0000137.
For example, principal = $2,000, interest rate = 8% or . 08, compounding periods = 365 and the number of years is 5.
For example, using the same information from Step 3, principal = $2,000, interest rate = 8% or . 08, compounding periods = 365 and the number of years is 5. Compound interest =2,000 * (1 + . 08/365) ^ (5 * 365) = $2983. 52.
