Using the Excel FV Function
SummaryThe Excel FV function calculates the future value of money based on a constant interest rate. The user specifies the interest rate, number of payments, the amount of each payment and the present value. FV can be used for either lump sum, periodic, or constant payments.
The FV function is one of Excel's financial functions.
Syntax=FV (rate, nper, pmt, [pv], [type])
Required. The interest rate paid each period. Be sure that the unit used to specify rate matches the unit used in the nper argument. For example, if you are making monthly payments on a 2 year loan with 3% annual interest, the rate argument would be 3%/12 and nper would be 2*3.
Required. The number of payment periods.
Required. The payment made each period. The payment amount should be constant over the period.
Optional. PV represents the present value, or how much the future payments are worth today. If PV is omitted it is assumed to be zero. Learn more about the PV function here.
Optional. Specifies when payments are due. Use 1 if the payment is due at the beginning of the period and zero (0) if payments are due at the end of the period. If blank, the value is assumed to be zero (0).
Usage NotesThe future value (FV) function finds the future value of an investment assuming periodic or constant payments with a constant interest rate.
For all arguments, cash that is paid out is represented by negative numbers and cash that is received is represented by positive numbers. If you do not enter the numbers with the correct sign, you will receive the wrong output.
Rate and Nper Units
When entering values for rate and nper it is critical that you are consistent with the units used. This may require some conversion (i.e. from annual to monthly).
For example, if you are making monthly payments on a 5-year loan at 5% annual interest, use 5%/12 for rate (to get the monthly rate) and 5*12 for nper (to get the total number of monthly payments).
Failing to ensure the units are the same will produce incorrect results.
The type argument allows users to specify when a payment is made. Use one for the beginning of the period and zero (0) for the end of the period. If type is omitted, it is assumed to be zero (0). This will impact your final answer.