Fv function in MS Excel

[Drrichard]

Hi
I am using FV function to plot my retirement plans.
FV mandates a regular, invariable contribution

My question

Is there a facility to perform an FV calculation
incorporating increasing contributions, say at 10% per
annum?

Drrichard

 

[Myrna Larson]

I think you'll need to set up an amortization table for this, with the
(varying) contributions in one column, the running balance in another. You
calculate the latter by taking the previous balance and adding the
contribution plus interest on the previous balance.

 

[Harlan Grove]

I think you'll need to set up an amortization table for this, with the
(varying) contributions in one column, the running balance in another. You
calculate the latter by taking the previous balance and adding the
contribution plus interest on the previous balance.

Purely analytical solutions aren't that difficult.

In the general case, with N periodic contributions of random size, the
accumulated value at a constant interest rate is given by

=NPV(r,Contributions)*(1+r)^(N-1)

For constant rate of growth, g, it could be boiled down to

=PV((1+r)/(1+g)-1,N,-InitialContribution)*(1+r)^(N-1)

['boiled down' in the sense that the underlying calculations are simpler and
more accurate, not in the sense that the formula is smaller]. It's only when
the interest rate varies that analytical solutions take real work, and even
then it can be handled by NPV in an array formula. Amortization tables are
never needed, though they may make it easier to interpret, understand and
verify the result.

 

[Myrna Larson]

Hi, Harlan:

Thanks for your comments. I always forget about NPV, because I've never done
anything that required its use.

Myrna Larson.

I think you'll need to set up an amortization table for this, with the
(varying) contributions in one column, the running balance in another. You
calculate the latter by taking the previous balance and adding the
contribution plus interest on the previous balance.

Purely analytical solutions aren't that difficult.

In the general case, with N periodic contributions of random size, the
accumulated value at a constant interest rate is given by

=NPV(r,Contributions)*(1+r)^(N-1)

For constant rate of growth, g, it could be boiled down to

=PV((1+r)/(1+g)-1,N,-InitialContribution)*(1+r)^(N-1)

['boiled down' in the sense that the underlying calculations are simpler and
more accurate, not in the sense that the formula is smaller]. It's only when
the interest rate varies that analytical solutions take real work, and even
then it can be handled by NPV in an array formula. Amortization tables are
never needed, though they may make it easier to interpret, understand and
verify the result.

 

[Myrna Larson]

PS: I'll be interested to see your reply to the Chi-Square question in the
Misc group.

 

[Harlan Grove]

PS: I'll be interested to see your reply to the Chi-Square question in the
Misc group.

I don't follow .misc closely, and I usually defer to Jerry Lewis on the
stats functions.