More Excel Mathematical Functions
The Excel Power function
The power function is used (as you have probably guessed) to raise a number to a power.
For instance, the formula:
=Power(10,2) is 10*10 (can be written 102) which equals 100
=Power (2,3) is actually 2*2*2 (or 23), which equals 8
Note
Excel also includes the operator '^' for the Power() function.
So instead of writing:
=Power(10,2)
You can write:
=10^2
The power function can be used in many ways, but perhaps it's most well known use is with compound interest rate.
The following sheet shows the return on investment on a $5000 investment carrying a 5% interest rate over different investment periods (column C).
You calculate the return on investment by raising the interest rate by the power of the time period then multiplying it with the original investment sum.
This will translate to the following Excel formula:
=A2*POWER(B2,C2)
Note
To get a feel of the Power() function try the following exercise:
Open a new sheet and simulate the growth rate of an imaginary virus. The rules of the game are very simple. Each generation the virus splits into 2 new viruses.
Put the number 2 in cell A1
Put the number of generations (start with 5) in cell A2
And put the formula =Power(A1,A2) in B2
B2 will show you how many viruses there are after 5 generations.
Now play with the number of generations and see how the results change.