PRODUCT

Multiplies all the numbers given as arguments and returns the product.

Syntax:

PRODUCT(number1, number2, ... number30)

number1 to number30 are up to 30 numbers or ranges/arrays of numbers whose product is to be calculated.

PRODUCT returns number1 * number2 * number3 * ........PRODUCT ignores any text or empty cell within a range or array.

Example:

PRODUCT(2; 3; 4)

returns 24 (2 * 3 * 4).

PRODUCT(A1:A2)

where A1 and A2 contain 3 and 5, returns 15 (3 * 5).

Application:

A common application of the PRODUCT function is in finance, specifically when calculating the cumulative growth factor or compound growth over multiple periods.

Let's imagine you are an investor tracking the growth of your portfolio over four quarters. You want to see the total growth factor for the entire year.

Scenario:

Your investment portfolio has the following quarterly growth rates:

Q1: 5% increase
Q2: 3% increase
Q3: 6% increase
Q4: 4% increase

To calculate the total growth factor, you need to first convert the percentage growth rates into growth factors. The formula for a growth factor is 1 + growth rate.

Table of Quarterly Growth and Growth Factors:

	Quarter	Quarterly Growth Rate	Growth Factor (1 + Rate)
	A	B	C
1	Q1	5%	1.05
2	Q2	3%	1.03
3	Q3	6%	1.06
4	Q4	4%	1.04

Using the PRODUCT Function:

Instead of manually multiplying each growth factor (e.g., 1.05×1.03×1.06×1.04), you can use the PRODUCT function.

The function would look like this:

PRODUCT(1.05, 1.03, 1.06, 1.04)

Result:

The PRODUCT function will calculate the product of these values, which is 1.1922456.

Interpretation:

The result, 1.1922456, is the cumulative growth factor for the entire year. This means your portfolio has grown by a total of 19.22456% over the four quarters.

If your initial investment at the beginning of the year was, say, $10,000, you could use this growth factor to find the final value:

Final Value = Initial Value * Cumulative Growth Factor

Final Value = $10,000 * 1.1922456

Final Value = $11,922.46

This example shows how the PRODUCT function simplifies the calculation of compounded growth, which is a fundamental concept in finance.

Result for PRODUCT(1.05, 1.03, 1.06, 1.04):

1.1922456

Result for Final Value:

11922.46