An annuity is a series of equal cash flows, spaced equally in time. In this example, a $5000 payment is made each year for 25 years, with an interest rate of 7%. To calculate future value, the PV function is configured as follows:
rate - the value from cell C5, 7%.
nper - the value from cell C6, 25.
pmt - the value from cell C4, 100000.
pv - 0.
type - 0, payment at end of period (regular annuity).
With this information, the future value of the annuity is $316,245.19. Note payment is entered as a negative number, so the result is positive.
An annuity due is a repeating payment made at the beginning of each period, instead of at the end of each period. In Excel's FV function, set the type argument to 1 for an annuity due:
To get the present value of an annuity, you can use the PV function. In the example shown, the formula in C9 is: = PV ( C5 , C6 , C4 , 0 , 0 ) Explanation An annuity is a series of equal cash flows, spaced equally in time. In this example, an...
This simple example shows how present value and future value are related. In the example shown, Years, Compounding periods, and Interest rate are linked in columns C and F like this: F5 = C9 F6 = C6 F7 = C7 F8 = C8 The formula to calculate future...
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.
The Excel PV function is a financial function that returns the present value of an investment. You can use the PV function to get the value in today's dollars of a series of future payments, assuming periodic, constant payments and a constant...
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