Here is a common problem in consumer economic: Suppose you deposit P dollars in

Question

Here is a common problem in consumer economic: Suppose you deposit P dollars in a bank account, and allow the money to remain in the bank for n years. If the bank pays interest at an annual interest rate I (expressed as a decimal), how much money will accumulate after n years? The amount of money accumulated will vary, depending on the frequency of compounding.The following equations apply: Annual compounding: F=P(1+i)^n Quarterly compounding: F=P(1+i/4)^4n Monthly compounding: F=P(1+i/12)^12n Daily compounding: F=P(1+i/365)^365n In each of these equations, n is always the number of years, and i is the annual (yearly) interest rate, expressed as a decimal.

Explanation / Answer

Sample results for first scenario

Formula:=(IF(D2="A",A2*(POWER(1+B2,C2)),IF(D2=Q,A2*(POWER(1+B2/4,4*C2)),IF(D2="M",A2*(POWER(1+B2/12,12*C2)),A2*(POWER(1+B2/365,365*C2))))))

here I have given the formula for F for daily compounding in else only because if term is not A,Q,M it will be D.

Second scenario

Formula =(IF(OR(D2="A",D2="a"),A2*(POWER(1+B2,C2)),IF(OR(D2="Q",D2="q"),A2*(POWER(1+B2/4,4*C2)),IF(OR(D2="M",D2="m"),A2*(POWER(1+B2/12,12*C2)),IF(OR(D2="D",D2="d"),

I have used OR function for handling lower case and upper case input and now all 4 compounding periods are in nested if's and else result is Data Error

sample results:

see when K is inputted it gives data error

P i n term F 5000 0.05 20 A 13266.49 5000 0.05 20 Q 13507.42 5000 0.05 20 M 13563.2 5000 0.05 20 D 13590.48

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