Description

CompoundInterestλ() calculates accumulated principal plus compounded interest based on APR, compounding frequency per year, and years invested or borrowed. CompoundInterestλ uses this formula:

=Principal * ( 1 + (AnnualRate / PeriodsPerYear)) ^ (PeriodsPerYear * Years)

Benefit:
Packaging difficult to remember formulas into functions prevents errors due to remembering incorrectly or mistyping the formula. 

Example

Below we are borrowing 10,000 at an APR of 8%. We want to know how much principle plus interest we will owe given different compounding intervals and years held.

At the bottom, we enter our function, CompoundInterestλ(), and provide its inputs: Principle, Annual Rate, Compounding Periods Per Year, and Years. As we make changes to Compounding Periods Per Year and Years, our function projects the principal plus interest. 

At the top is a compounding corkscrew that we can use to test CompoundInterestλ(). The function is calculating correctly when values highlighted in light copper match, which they do.