Calculating compound interest requires accurate measurements, and you can use how to calculate yield to maturity in excel the Microsoft Office Excel to calculate yield to maturity easily. All you need are the amount of principal invested, the interest rate per year, and the rates of daily, monthly, or quarterly compounding when the initial principal was invested. Below are the instruction on calculating the yield to maturity with Microsoft Excel.
- Open an Excel worksheet, and save it anywhere on your computer’s hard drive.
- Then change the width of the column A of this sheet. Make it wide enough to adjust 40 characters.
- Select the cells B1, B2, B3, and B4, by clicking on the cells and holding ‘Ctrl”. Right click and then choose the ‘Format Cells’ option.
- Choose the ‘Number’ under the ‘Category’ section and then click on ‘OK’.
- Right click on B5 cell and choose the ‘Format Cells’. Again, choose ‘Currency’ in the ‘Category’ section, and then select ‘OK’.
- For the cells A1 till A5, enter the text in the given cells:
A2: Interest Rate (as a decimal)
A3: Number of interest periods per year
A4: Number of conversion periods to elapse
A5: Value to maturity
- In B5, type: =B1*(1+B2/B3) ^B4’
- Enter the principal initially amount invested in cell B1. In B2, fill the interest rate per year.
- Enter the number of time interest compounded in a year in B3.
- Enter the interest period in B4.
- In B5, the result will appear.
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