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10 points How would you calculate continuously compounded returns in excel?

I have data on a stock for 20 years and I am just using the adjusted close price. Is the formula simply Ln(adjusted close price2)-LN(adjusted close price1)?

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  • 2 months ago
    Favorite Answer

    i = LN(FV / PV) / n

    PV = Present Value

    FV = Future Value

    i = Discount rate  

    n = Number of periods

    e = Base of the natural logarithm (LN) ≈ 2.71828

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  • Don G
    Lv 7
    2 months ago

    The formula for Continuous Compounding, where A is the sum of principle and interest is: A = Pe^(rt), where e = 2.7183. Assume P = $10,000; R = 15%; T = 5

    Solution: A = (10,000) 2.7183^.75 = (10,000) 2.117 = $21,170.

    Using a financial calculator, enter rt (.75), then 2ND e^x to get 2.117. Then A = (10,000) 2.117 = 21,170.

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