Problem

You need to compute the future value of a series of payments, considering the time value of money.

Solution

Use the `FV` function.

Discussion

`FV` performs essentially the reverse of `PV,` which was discussed in the previous recipe. Consider this example: what is the future value of $500 monthly payments over five years at an annual 8% interest rate? You can use `FV` to find an answer. The syntax for `FV` is `=FV(`*rate*`,` *nper*`,` *pmt*`,` *pv*`,` *type*`)`, where ` rate` is the interest rate per period,

For our example, the cell formula `=FV(0.08/12,5*12,-500,0,0)` returns a future value of $36,738.43. The interest rate passed in as the first argument in the call to `FV` is 0`.08/12` to compute the monthly rate, since payments are made every month. Further, the number of payments over the five-year period was entered as `5*12`. Also, the $500 monthly payment was entered as a negative value, indicating it's an out payment.

See Also

Take a look at the other recipes in this chapter to learn about other calculations of the time value of money.

Excel Scientific and Engineering Cookbook (Cookbooks (OReilly))

ISBN: 0596008791

EAN: 2147483647

EAN: 2147483647

Year: N/A

Pages: 206

Pages: 206

Authors: David M Bourg

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