Okay, so I'm not the brightest bulb on the tree when it comes to mathmatics. It really bugs me and I've been trying to fill in gaps where poor math teachers and my lack of discipline caused me to realize that I'm a little slow in this department.
So anyways, I have some questions. I posted this in another forum, but there's only one fellow there that likes to do this sort of thing and I'm loathe to place the burden of my idiocy on his shoulders.
What I'm trying to do is compute daily compound interest for a few days at a time. I'm trying to build a calculator in excel that will make this job easier in the future. I've applied some formulas I've found in other places, but my numbers just don't seem to be adding up. I must be making an error.
So I'll repeat the short discussion here:
quote:Let me define some of these variables: FV = Future Value PV = Present Value i = Interest (yearly) n = Investment Period
Here's the compound interest formula, modified to calculate interest in days rather than years. It might be wrong too:
quote:FV = PV (1+(i/365))^n
Here's the same equation, solving for i:
quote:i = ((FV/PV)^(1/(n/365))-1)
I need to use that equation, because it's the only way to solve nth roots in excel...
Again, solving for n:
quote:n = (ln(FV/PV)/ln(1+(i/365))
And solving for PV:
quote:PV = FV/(1+(i/365)^n)
Am I wrong? These formulas just don't seem to be calculating right in Excel. Is it a rounding problem or am I just dumber at math than a 1st grade drop out?
So, um, help?
Posted by BannaOj (Member # 3206) on :
I think theres' a problem with your 2nd equation... am working on it.
AJ
Posted by BannaOj (Member # 3206) on :
I used natural logs for the heck of it, and changed your small n to an N to avoid confusion.
Here's my steps and I don't think you'll have a problem with this in excel if you enter it right.
quote: FV = PV (1+(i/365))^N
quote:FV/PV = (1+(i/365))^N
quote:ln(FV/PV) = N ln(1+(i/365))
quote:ln FV- ln PV = N ln(1+(i/365))
quote:(ln FV- ln PV)/N = ln(1+(i/365))
quote:e^[(ln FV- ln PV)/N] = 1+(i/365)
quote:-1+ e^[(ln FV- ln PV)/N] = i/365
quote:365{-1+ e^[(ln FV- ln PV)/N]} = i
Posted by BannaOj (Member # 3206) on :
Where Papa Moose when you need him? He and Icarus are the true math gurus.
AJ
Posted by BannaOj (Member # 3206) on :
somebody double check me...please?
AJ
Posted by Morbo (Member # 5309) on :
Your solution for PV,
PV = FV/(1+(i/365)^n)
should have the n on the outside of the nested paragraphs,
PV = FV/(1+(i/365))^n ,
like it was in the 1st equation for FV. I don't know if that's just a typo here, or if you entered the same thing in Excel.
Your solution for i is incorrect, and I think AJ's is good.
Her solution is the equivilent of
i= 365( -1 + (FV/PV)^(1/N) ) , which is what I got.
The n solution equation seems good.
Posted by Primal Curve (Member # 3587) on :
Ha! Brilliant! It works!
Thanks for the help, Banna, Morbo and Icarus (who is the other fellow)!