# Compound Interest Calculation

**URL:** <https://boards.straightdope.com/t/compound-interest-calculation/410675>\
**Category:** Factual Questions\
**Created:** [July 6, 2007, 12:43am UTC](https://boards.straightdope.com/t/compound-interest-calculation/410675 "2007-07-06T00:43:07Z")\
**Posts on this page:** 1\
**Page:** 2

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**Author:** ![CookingWithGas](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cookingwithgas/32/485_2.png) [@CookingWithGas](https://boards.straightdope.com/u/CookingWithGas)\
**Post date:** [July 9, 2007, 1:00pm UTC](https://boards.straightdope.com/t/compound-interest-calculation/410675/21 "2007-07-09T13:00:40Z")

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Sorry for the late hit but I got caught in the board’s outage.

I solved this iteratively using interest compounded daily. I used daily compounding because that would be the most likely way an alternative cash investment would be compounded (actually they may do continuous compounding these days). I think the 267% given earlier is based on semi-monthly compounding.

I get about 125.567% annualized rate. That’s still unbeatable. Your reasoning is correct regarding the timing. A dollar contributed the day before the stock purchase earns 15% in one day, which is annualized without compounding to 5,475%. Even a dollar contributed on the first day of the quarter earns 15% in a quarter, which is annualized without compounding to 45%.

There is no reason that anyone who works for your bank should pass this up. There is no better alternative investment.

My spreadsheet is posted at [www.seigle.net/annualinterest.xls](http://www.seigle.net/annualinterest.xls)

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