Compound interest calculation

[Former Member]

Hello all,

The standard formula provided by SAP for the compound interest calculation is

Interest = Equity * (exp(log(1+interest rate/100)*(days/360(365)))-1)

Can any of you, please let us know how to replicate this formula in MS Excel? What "log()" function to be used? In MS Excel, what should be the base for this log function?

This is to explain our client's customer, in case if the customer asks how the client has calculated the interest.

Thanks,

Sakthi.

Edited by: Sakthi Murugan on Sep 8, 2008 4:13 AM

[Former Member · Accepted solution]

Here's what I got as a reply from SAP:

"Please be aware, that the

used functions within ABAP are not almost equal to the calulator.

LOG natural logarithm

EXP exponential function (constant e is basis of the natural logarithm

with the value 2,7182818)

Example:

0.0117942 = 55,93 * (EXP ( LN (1,08) * 1/365 ) - 1 )

55,93 * (EXP (0,0796961 / 365) -1)

55,93 * (EXP 0,0002108521) -1

55,93 * (2,7182818 (EXP 0,0002108521) -1)

55,93 * (1,0002108743208 -1)

I hope, the described calculation helps you further. It is not that easy to calculate compound interests manually.

Good luck."

Regards,

Milton

FI-CA

[Former Member · Accepted solution]

Thanks Milton, we simulated the calculation in MS Excel taking the base of log as 2.72. But now after seeing this query, we understand that SAP uses the standard value of constant e as 2.7182818.

Thanks a lot for your reply.

Regards,

Sakthi.