In this example, we are computing the compounded interest for an original principal amount of $100,000 with an interest rate of 5% over 10 periods of time. Thus, this could represent a 5% interest rate compounded annually over 10 years. The Principal measure represents the amount of our original principal, while the Interest Rate measure represents our interest rate. Finally, the Periods measure represents the number of periods over which interest is compounded.
We can compute the amount of compound interest for a given original principal amount, interest rate, and the number of compounding periods by implementing the formula for compound interest in DAX. The formula for compound interest is as follows:
Our Compound Interest measure implements this formula using the POWER DAX function, as well as basic DAX math operators. In our example, the interest that's earned on a $100,000 investment with an interest rate of 5% compounded annually over 10 years is $62,890, as shown by our Card visualization.