FV future value
Intermediate Financial AnalystFuture value is a key concept for retirement planning and savings goals. The FV function tells you how much your money will grow over time with regular contributions and compound interest.
The FV function calculates what your savings will be worth at a future date. For a savings plan with regular deposits, it takes these arguments:
- rate: The interest rate per period
- nper: The total number of payment periods
- pmt: The payment made each period (as a negative number)
The syntax looks like this:
=FV(rate, nper, pmt)
Key consideration:
Just like with PMT and PV, the rate and number of periods must match your deposit frequency. For monthly deposits, divide the annual rate by 12 and multiply years by 12.
Your task:
You're planning for retirement and want to know how much you'll accumulate. The spreadsheet shows a savings plan with monthly deposits of $500, a 6% annual interest rate, and a 20-year time horizon.
Calculate the future value of this savings plan in cell B9.
Need some help?
Hint 1
Divide the annual interest rate by 12 to get the monthly rate, and multiply years by 12 for total periods.
Hint 2
The payment (pmt) should be negative because it represents money leaving your pocket into savings.
Hint 3
Your formula needs three arguments: B5/12 for rate, B6*12 for nper, and -B4 for pmt.
FV future value
Intermediate Financial AnalystFuture value is a key concept for retirement planning and savings goals. The FV function tells you how much your money will grow over time with regular contributions and compound interest.
The FV function calculates what your savings will be worth at a future date. For a savings plan with regular deposits, it takes these arguments:
- rate: The interest rate per period
- nper: The total number of payment periods
- pmt: The payment made each period (as a negative number)
The syntax looks like this:
=FV(rate, nper, pmt)
Key consideration:
Just like with PMT and PV, the rate and number of periods must match your deposit frequency. For monthly deposits, divide the annual rate by 12 and multiply years by 12.
Your task:
You're planning for retirement and want to know how much you'll accumulate. The spreadsheet shows a savings plan with monthly deposits of $500, a 6% annual interest rate, and a 20-year time horizon.
Calculate the future value of this savings plan in cell B9.
Need some help?
Hint 1
Divide the annual interest rate by 12 to get the monthly rate, and multiply years by 12 for total periods.
Hint 2
The payment (pmt) should be negative because it represents money leaving your pocket into savings.
Hint 3
Your formula needs three arguments: B5/12 for rate, B6*12 for nper, and -B4 for pmt.