Fresh Excel Tips

In this example you want to save money for five months. The interest rate is 3.5%. Every month you deposit $500 at the bank. How much money is in your bank account after five months? This question can be answered by using the FV function. It returns the future value of an investment based on periodic, constant payments and a constant interest rate. Here is the syntax that is used:
FV(rate, nper, pmt, pv, type)
rate: The interest rate per period.
nper: The total number of payment periods in an annuity.
pmt: The payment made each period, which is a constant value.
pv: The present value. This is the amount that a series of future payments is worth right now.
type: A number that indicates when payments are due. 0 indicates the end of the period, and 1 indicates the beginning of the period.

To calculate the total of an account with regular deposits and a constant interest rate:

1. Enter the current interest rate in cell B1 and the number of periods in cell B2.
2. In cell B3 enter the monthly amount to be put in the savings account.
3. In cell B4 type the formula =-FV(B1/12,B2,B3).
4. Press Enter.

This tip is compatible with Excel 97, 2000, 2003 and 2007.

1. How to Use the PMT function to determine the payment of a loan
2. How to Use the RATE function to calculate interest rate in Excel
3. How to use the PV function to decide how much money to invest
4. Use the DDB function to calculate double-declining balance method
5. Defining a Constant in Excel 2007