The FV function is used to calculate the future dollar amount you will have saved assuming a fixed payment period at a set interest rate. For example, you may wish to calculate the balance of your savings account if you deposit $75 a week for 5 years at 6% interest.
To calculate future value, the FV function uses 3 arguments:
1. rate – the interest rate. If you are depositing an amount weekly into your account with an interest rate of 6%, this argument would read:
.06/52 (rate divided 52 weeks).
2. nper – the total number of payments you want to make. To deposit an amount weekly into your account for 5 years, this argument would read:
5 * 52 (5 years * 52 weeks)
3. pmt – the amount to be deposited each period. This is entered as a negative number. Thus, if you were to deposit $75 a week, this argument would read:
-75.
Thus, the format of the FV function is:
=FV(rate, nper, pmt)
To Calculate a Future Value with the FV Function
- Activate the cell in which you want to place the formula.
- Click the Insert Function Button.
- Select Financial from the Select a Category drop-down list.
- Select FV from the Select a Function list box.
- Click OK.
- Enter the interest rate per period in the Rate text box.
- Enter the total number of payments of the loan in the Nper text box.
- Enter the payment amount for each period as a negative number in the Pmt text box.
- Press the Enter key to verify the formula.
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