POW

Returns a number that is a number to the power of another number

Syntax:

POW(value, power_value)

POW calculates a result by doing value to the power of power_value.

Example:

If A1 contains 2 and A2 contains 3:

POW(A1, A2)

returns 8

Value:

Power value:

Result:

2^3  =  8

Application:

An application of the POW function can be found in calculating compound interest.

Let's say you invest an initial principal amount of $1,000 in a savings account with an annual interest rate of 5%. We want to calculate the value of your investment after 3 years, with the interest compounded annually.

The formula for compound interest is:

$A = P (1 + r)^{t}$

Where:

A is the final amount.
P is the principal amount (initial investment).
r is the annual interest rate (as a decimal).
t is the number of years.

In our case:

P=1000
r=0.05
t=3

To solve this, we can use the POW function. The POW function (or power function) is a mathematical function that raises a base to a specified power. It is often written as POW(base, exponent).

In our example, the base is (1+r), which is (1+0.05)=1.05. The exponent is t, which is 3.

So, the calculation would be:

A=1000×POW(1.05,3)

Let's break down the calculation year by year:

	Year	Calculation	Amount at End of Year
	A	B	C
1	1	1000×(1.05)1	1050
2	2	1050×(1.05)1 or 1000×(1.05)2	1102.5
3	3	1102.50×(1.05)1 or 1000×(1.05)3	1157.63

Using the POW function simplifies this to a single step:

A=1000×1.157625 A=1157.625

Therefore, the value of your investment after 3 years would be $1,157.63 (rounded to two decimal places). The POW function efficiently calculates the (1.05)3 part of the formula.