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Estimate effective interest rates

Let's say you invested $1000 at 8% simple interest rate for 5 years. What kind of effective interest rates should you see across different compounding frequencies?

Use the following formula to estimate that rate: (1 + Nominal Rate/Compound Freq)^Compound Freq - 1

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Financial Modeling in Google Sheets

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Instrucciones del ejercicio

  • In C8, enter the formula above with absolute cell references for the nominal rate and relative references for the compounding frequency.
  • Copy that formula to all compounding frequencies from C8:C14.

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