**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)

Computing the compound interest of an initial investment is easy for a fixed number of years. But let’s add an additional challenge.

What if you are also putting in **monthly contributions** to your investment? Now that’s a lot more challenging to compute now!

**How much would be available for you at the end of your investment?**

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

In our example below, we have the table of values that we need to get the compound interest or Future Value from:

There are two important concepts we need to use since we are using monthly contributions:

- Since our interest rate is the annual rate, we will have to
**divide it by 12**to make it monthly - We will need to convert our number of years into number of months by
**multiplying it by 12**

I explain how you can do this below:

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

## =FV(

**STEP 2:** The **FV **arguments:

**rate**

**rate**

**What is the rate of the interest?**

*Select the cell containing the interest rate and divide it by 12 to get the monthly interest rate (make sure that this is in a percentage):*

## =FV(B9/12,

**nper**

**nper**

**How many periods?**

*Select the cell containing the number of years and multiply it by 12 to get the number of months:*

## =FV(B9/12, C9*12,

**pmt**

**pmt**

**What is the periodic payment?**

*Select the cell that contains your monthly contribution (this is your periodic payment):*

## =FV(B9/12, C9*12, D9,

**pv**

**pv**

**What is the initial amount?**

*PV stands for present value, the initial amount. Multiply the entire result by -1.*

## =FV(B9/12, C9*12, D9, A9) * -1

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!

**Calculate the Monthly Investment with Excel’s FV Formula**

HELPFUL RESOURCE: