Achieving a Certain Future Value

Problem

You want to put away a sum of money annually at a given interest rate in order to achieve a specific future value to cover a known upcoming expense. You need to know how much to put away each year.

Solution

Use the PMT function.

Discussion

By way of example, let's assume you need $150,000 in 15 years' time and you want to invest a sum of money annually to raise this money. You're confident you can get an annual interest rate on your investment of 7.6%. How much do you invest each year?

You can use the PMT function (see Recipe 14.5) to compute the annual amount to invest. The formula =PMT(0.076, 15, 0, 150000, 0) returns a payment value for this example of $5,698.76 per year.

See Also

See Recipe 14.5 for more information on the syntax for PMT.

Using Excel

Getting Acquainted with Visual Basic for Applications

Collecting and Cleaning Up Data

Charting

Statistical Analysis

Time Series Analysis

Mathematical Functions

Curve Fitting and Regression

Solving Equations

Numerical Integration and Differentiation

Solving Ordinary Differential Equations

Solving Partial Differential Equations

Performing Optimization Analyses in Excel

Introduction to Financial Calculations

Index





Excel Scientific and Engineering Cookbook
Excel Scientific and Engineering Cookbook (Cookbooks (OReilly))
ISBN: 0596008791
EAN: 2147483647
Year: N/A
Pages: 206
Authors: David M Bourg
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