How to Calculate Compound Annual Interest in Excel 2003

1. Label cell A1 'Original Principal,' cell A2 'Compounding Periods Per Year,' A3 'Annual Interest Rate (as a percentage)' and cell A4 'Annual Interest.'
2. Enter the amount of money you put into the account in cell B1, the number of times per year into B2 and the annual interest rate expressed as a percentage in cell B3. For example, if you started with $1,000 and your bank pays 3.5 percent interest, compounded on a monthly basis, you would enter '1000' in cell A1, '12' in cell A2 and '3.5' in cell A3.
3. Enter the formula '=B1*(1 B3/1200)^B2-B1' in cell A4. When you enter this formula, the amount of annual interest will be displayed. In this example, after entering the formula, Excel would display 35.56695, meaning you would earn $35.57 in interest for the year.