FV(payment, rate, periods)

The FV function calculates the future value of an annuity, based on the payments per period, interest rate per period, and the number of periods for which you want the value calculated. The formula used is:

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Example 1: The future value of an annuity with annual $500 payments at an interest rate of 13.5% per annum, compounded over five years, is calculated using the formula:

FV(500, 13.5%, 5)

Ability calculates the future value and displays 3272.44 or $3,272.44 (depending on the currency formatting of the cell – use the Number command from the Format menu to change it).

Example 2: Each month you deposit $50 at a bank. Interest accrues at an annual rate of 13.5% but is applied monthly. To calculate the value of the account after six months, use FV in conjunction with NOMINAL (see NOMINAL) as follows:

FV(50, NOMINAL(13.5%, 12)/12, 6)

This returns a value of $308.07.

See also:

Other financial functions