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0207 POWER() vs. Caret Sign ( ^ )

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Welcome everybody, this time he talks about a formula or a trick, which allows you to multiply our five into five into five into five using a simple trick. So if you are thinking of multiplying certain number of times, do not apply this old traditional trick where you have to put in the same number a couple of times no other way to give you the answer, but this is rather tedious. Rather than using this trick, I would ask you to put that digit five, put shift six in place that will give the carrot sign which is to the power sign as for Excel, and then put the digit four, so five to the power four is 625. The same thing can also be achieved using a formula although people rarely use this, but they may write the formula power which asks for a number and then asked for the power component that means to the power what four 625 Where is this used?

Quite often in the areas corporate finance and valuation, were compounding discounting annuity all these are very nominal calculations. So in this case, I have certain cash invested in a certain project, let's say today $5,000. The rate of return that I'm expecting is 10%. And I wish to find out that at the end of year one, at the end of year two, or year three, or year four or five, how much money would I be left with if I keep the money invested. So I'm choosing equal to equal to Formula choosing the cell counting $5,000 pressing f4 to ensuring it's fixed, locked, multiplied with within brackets one plus plus what rate of return being 10% I fixed that too. Then Then comes a trick bar to the power to the power one to the power one.

So this is the formula which normally finance professionals do apply for compounding. So at the end of year one 5000, which is the principal plus 10% return return that happens to be 500. all added up and given to you 5500. But then you ask yourself, I wish to keep this money. invested for another year. And let's see how much money would you find at the end of year two. So the same formula if I copy paste the next cell, it says 5500 plus 550.

That happens to be how much 6050. If I copy paste the formula that the cell drag autofill option, or I may simply choose shift Right, right, right and press Ctrl Yes, Ctrl R. So I'm able to find out to this to the power sign that the end of year three or year four or five, how much money would I be left with if I keep the money invested? So that was it to the bar sign

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