Explanation
The FV function calculates compound interest and returns the future value of an investment over a specified term. To configure the function, we need to provide a rate, the number of periods, the periodic payment, and the present value:
- Present value (pv) is the named range G4
- Rate is provided as annual rate/periods, or rate/C5
- Number of periods (nper) is given as periods * term, or C5 * term
- There is no periodic payment, so we use zero (0)
By convention, the present value (pv) is input as a negative value, since the $1000 "leaves your wallet" and goes to the bank during the term.
The named ranges automatically behave like absolute references, so there is no need to use dollar signs ($).
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The general formula for simple interest is: interest=principal*rate*term So, using cell references, we have: =C5*C7*C6 =1000*10*0.05 =500
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If you have an annual interest rate, and a starting balance you can calculate interest with: =balance * rate and the ending balance with: =balance+(balance*rate) So, for each period in the example, we use this formula copied down the table: =C5+(C5*rate) With the FV function The FV function can...
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Related functions
FV Function
The Excel FV function is a financial function that returns the future value of an investment. You can use the FV function to get the future value of an investment assuming periodic, constant payments with a constant interest rate.
