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Calculate the Compound Interest with Excel’s FV Formula

What does it do? Calculates the compound interest Formula breakdown: =FV(rate, nper, pmt, [pv]) What it means:... read more

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Bryan
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Overview

Calculate the Compound Interest with Excel's FV Formula | MyExcelOnline Calculate the Compound Interest with Excel's FV Formula | MyExcelOnline

What does it do?

Calculates the compound interest

Formula breakdown:

=FV(rate, nper, pmt, [pv])

What it means:

=FV(interest rate, number of periods, periodic payment, initial amount)


Say that you turn 18 years today (CONGRATS!) and you find out that your parents deposited an amount with their bank when you were born.

Now that you are 18 years old you can collect this money and go spend it all in one day!

How much would be available for you to spend?

Thankfully there is an easy way to calculate this with Excel’s FV formula! FV stands for Future Value.

The future value (FV) is the value of a current asset at a specified date in the future based on an assumed rate of growth over time.

Calculate the Compound Interest with Excel's FV Formula | MyExcelOnline
In our example below, we have the table of values that we need to get the compound interest or Future Value from:

(Change the NUMBER OF YEARS column to 18 to see the results on your 18th birthday)

Calculate the Compound Interest with Excel's FV Formula

I explain how you can do this below:

Download excel workbookCOMPOUND-AVERAGE-FORMULA.xlsx

STEP 1: We need to enter the FV function in a blank cell:

=FV(

Calculate the Compound Interest with Excel's FV Formula

 

STEP 2: The FV arguments:

rate

What is the rate of the interest?

Select the cell containing the interest rate (make sure that this is in a percentage):

=FV(B9,

Calculate the Compound Interest with Excel's FV Formula

nper

How many periods?

Select the cell containing the number of years:

=FV(B9, C9,

Calculate the Compound Interest with Excel's FV Formula

pmt

What is the periodic payment?

We have no periodic payment, only an initial amount, so let us put in 0:

=FV(B9, C9, 0,

Calculate the Compound Interest with Excel's FV Formula

pv

What is the initial amount?

PV stands for present value, the initial amount. We need to change this to a negative value by multiplying -1.

The reason why we need this as a negative value as Excel treats this as “money out” for your investment.

=FV(B9, C9, 0, A9 * -1)

Calculate the Compound Interest with Excel's FV Formula

 

Apply the same formula to the rest of the cells by dragging the lower right corner downwards.

You now have all of the compound interest results!  GO OUT & SPEND!

Calculate the Compound Interest with Excel's FV Formula

 

Get the Compound Interest with Excel’s FV Formula

 

 

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Calculate the Compound Interest with Excel's FV Formula | MyExcelOnline Calculate the Compound Interest with Excel's FV Formula | MyExcelOnline
Calculate the Compound Interest with Excel's FV Formula | MyExcelOnline
Bryan

Bryan Hong is an IT Software Developer for more than 10 years and has the following certifications: Microsoft Certified Professional Developer (MCPD): Web Developer, Microsoft Certified Technology Specialist (MCTS): Windows Applications, Microsoft Certified Systems Engineer (MCSE) and Microsoft Certified Systems Administrator (MCSA).

He is also an Amazon #1 bestselling author of 4 Microsoft Excel books and a teacher of Microsoft Excel & Office at the MyExecelOnline Academy Online Course.

See also  How to Calculate Interquartile Range in Excel Fast

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