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  1. #1
    New Lounger
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    Calculating Future Value (97+)

    Howdy. I need to calculate how much an investment will be worth, assuming a certain interest rate is compounded annually. For example, if I invest $1,000 and interest compounds annualy at 15%, how much will the investment be worth in 10 years?

    I'm stumped on what should be a very simple formula.....

    Thanks!

  2. #2
    New Lounger
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    Re: Calculating Future Value (97+)

    Thanks for the reply.

    1) I did look at the FV function (and the related See Also's), but I wasn't sure that it's compounding. And, if it is, that it compounds for each period I inidcate... Yes?

    2) While I'm at it, a sanity check that I'm using it correctly.... let's say I invest $1,000 and earn 15% annual interest. So, to calc what it will be worth in 10 years, I'd use:
    =FV(0.15, 10, 0, -1000)
    which returns $4,045.56. Correct?

    Thanks again!

  3. #3
    Uranium Lounger
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    Re: Calculating Future Value (97+)

    Check out Excel's built-in =FV() function, and all the related financial functions in the Help <font color=448800>"See Also"</font color=448800> link. If they don't help, come on back to the Lounge. In your example, =FV(15%, 10, 0, -1000, 0) should do it.
    -John ... I float in liquid gardens
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  4. #4
    Uranium Lounger
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    Re: Calculating Future Value (97+)

    1. Yes, =FV() compounds based on the frequency you provide. If in your example you were compounding monthly instead of annually, you would use =FV(15%/12, 10*12, 0, -1000, 0). Simple interest (not compound) would be =1000*(1+15%*10).

    2. Bingo. <img src=/S/grin.gif border=0 alt=grin width=15 height=15>
    -John ... I float in liquid gardens
    UTC -7ąDS

  5. #5
    Uranium Lounger
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    Re: Calculating Future Value (97+)

    Thought I had this somewhere. More "primitive" formula to derive compound FV:
    =Principal*(1+Annual_Rate%/Compounding_Frequency_Within_Year)^(Term*Compoundi ng_Frequency_Within_Year)

    e.g. for monthly compounding and everything else as previously hypothesized:
    =1000*(1+15%/12)^(10*12)
    -John ... I float in liquid gardens
    UTC -7ąDS

  6. #6
    New Lounger
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    Re: Calculating Future Value (97+)

    Thanks again!

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