Financial Analytics - Interest Rate calculation

Interest Rate calculation

Simple Interest = PtR/100 

P= Principal

t=Time Period

R = Rate of Interest

Compound Interest over T :

A = P(1 + r/n)nt

• A = Accrued amount (principal + interest)
• P = Principal amount
• r = Annual nominal interest rate as a decimal
• R = Annual nominal interest rate as a percent
• r = R/100
• n = number of compounding periods per unit of time
• t = time in decimal years; e.g., 6 months is calculated as 0.5 years. Divide your partial year number of months by 12 to get the decimal years.
• I = Interest amount
• ln = natural logarithm, used in formulas below

Continuous Compounding :

𝐴=𝑃𝑒𝑟𝑡

P&L = V(T) - V(0)

Gross Return = V(T)/V(0)

Return = P&L/V(0)

Return = Gross Return -1

Annualized Return (Average of Returns over a period T)

(1+Row) Pow T = V(T)/V(0)

Row = (V(T)/V(0))Pow 1/T -1