FV function in excel is an inbuilt financial function in excel which can be also termed as future value function, this function is very useful in the calculation of the future value of any investment made by anyone, this function has some dependent arguments and they are the constant interest the periods and the payments.
Syntax:= FV (rate, nper, pmt, [pv], [type])
The FV function syntax has the following arguments:
- Rate Required. The interest rate per period.
- Nper Required. The total number of payment periods in an annuity.
- Pmt Required. The payment made each period; it cannot change over the life of the annuity. Typically, pmt contains principal and interest but no other fees or taxes. If pmt is omitted, you must include the pv argument.
- Pv Optional. The present value, or the lump-sum amount that a series of future payments is worth right now. If pv is omitted, it is assumed to be 0 (zero), and you must include the pmt argument.
- Type Optional. The number 0 or 1 and indicates when payments are due. If type is omitted, it is assumed to be 0.
|Set type equal to||If payments are due|
|At the end of the period|
|1||At the beginning of the period|
Example: Let’s look at some Excel FV function examples and explore how to use the FV function as a worksheet function in Microsoft Excel:
Syntax: =FV(B1/12, B2, B3, B4, B5)
Syntax: =FV(B1/12, B2, B3)
Syntax: =FV(B1/12, B2, B3,, B4)
1. Units for rate and nper must be consistent. For example, if you make monthly payments on a four-year loan at 12 percent annual interest, use 12%/12 (annual rate/12 = monthly interest rate) for rate and 4*12 (48 payments total) for nper. If you make annual payments on the same loan, use 12% (annual interest) for rate and 4 (4 payments total) for nper.
2. If pmt is for cash out (i.e deposits to saving, etc), payment value must be negative; for cash received (income, dividends), payment value must be positive.