In this article we will learn how to calculate the investment value for future or annuity for the present value by using the functions of Microsoft Excel.
When we made investment, the amount paid is entered in negative value so as to get the accurate result.
Annuity is the return we get and is written in positive because in future we have to pay interest amount along with principal amount.
INVESTMENT:
Let’s take an example and understand:
We want to invest $1000 every year, on the 10% rate of interest and for 10 years, then how much total value we will get after 10 years?
To calculate Future Value follow below given steps:-
As per the calculation, if we pay $1,000 in a year it means we have to pay $10,000, after 10 years we will get $15,937.42.
Note: In this function last two arguments are optional, if we omit it, then function assumes that payments are due at the end of the period.
ANNUITY:
We need to purchase annuity for 12 years with the amount $200 on monthly basis and rate of interest is 8%, how much does the annuity cost?
Follow below given steps:
As per the result, we have to pay $18,476.56 till the 12 years or we can do onetime payment.
Note: The last two arguments are optional. If omitted, Fv = 0 (no future value). If Type is omitted, it is assumed that payments are due at the end of the period. This annuity does not take into account life expectancy, inflation etc
If you liked our blogs, share it with your friends on Facebook. And also you can follow us on Twitter and Facebook.
We would love to hear from you, do let us know how we can improve, complement or innovate our work and make it better for you. Write us at info@exceltip.com
The applications/code on this site are distributed as is and without warranties or liability. In no event shall the owner of the copyrights, or the authors of the applications/code be liable for any loss of profit, any problems or any damage resulting from the use or evaluation of the applications/code.
