How to Calculate Interest Payments in Excel

Microsoft Excel is a computer spreadsheet program.

Microsoft Excel is a widely used computer spreadsheet program. Excel allows uses to enter data and formulas into the cells of the spreadsheet, which instantly computes the results of different mathematical equations. Using Excel to calculate interest payments provides quick answers and shows user the effect on the interest payment of changing one or more of the variables without having to reenter all of the variables into a calculator.

Instructions

1. Enter "Account Balance" in cell A1, "Annual Interest Rate (expressed as a percent)" in cell A2, "Interest Payments Per Year" in cell A3 and "Interest Payment" in cell A4.

2. Enter the account balance in cell B1. For example, if you had a loan of $5,000, you would enter "5000" in cell B1. Do not enter commas.

3. Enter the annual interest rate expressed as a percentage in cell B2. For example, if your annual interest rate equals 8.7 percent, you would enter "8.7" in cell B2.

4. Enter the number of times interest paid each year in cell B3. For example, if you make quarterly payments, you would enter "4" in cell B3 because you make four payments per year.

5. Enter "=B1*B2/100/B3" into cell B4 to calculate the interest payment. You enter "B2/100" instead of just B2 to convert from a percentage to a decimal. The interest payment will show up in cell B4 once you have entered the formula. Finishing this example, you would enter the formula "=B1*B2/100/B3" into cell B4 and Excel would display a result of $108.75 in cell B4.

References

• Teacher's Choice: Simple Interest

Resources

• Microsoft Excel