Question : Decompounding formula in excel
Say the annual rate is 25%.
What is the formula to de-compound it to semi-annual, quarterly and monthly.
Also, what is the formula to compound back the 3 mentioned terms back to an annual rate.
Thanks,
Solution : Decompounding formula in excel
=(1+X)^(1/n)-1
where X is rate
n is periods
so for 25% quarterly
=(1+25%)(1/4)
= 5.7% compounding per quarter
to re compound
=(1+5.7%)^4
Cheers
