Time Value of Money



I am one of those who is contstantly thinking of retirement and planning
for the big day. I have made a spreadsheet that will allow me to input
estimated rates, current salary, and different sources of retirement
income compared to different dates to retirement.

The problem that I'm having is that the results of my estimated
supplemental retirement using Excel and my TI BA II Plus don't have the
same results.

The formula that I'm using is:


E3="Now" date
E20=Desired Retirement Date
E4=Current monthly salary * 10%
-E5=Current Value of Supplemetal Retirement

The dividing by number of days by 360 and the percent of monthly
contributions by 12 were added to try and make things work.

Basically, I need to know what the value of my account will be in the
future with a current balance with monthly contributions, between a
date range at a specified % rate.

I hope that this makes sense.

Thank you,

N Harkawat

All you have to ensure is that the rate that you use should be the same as
the period defined (monthly or yearly or daily) and of corse if you are
contributing at the end or at the beginning of the period.

Say you have a beginning balance of $100 and you contribute $10 every month
(beginning of the month) for 12 months.
From your question what I gather is "How miuch will be the value of your
account at end of 12 months?"
Say interest rate is 12%

Using this formula I know what I will have
= $240.78

you $100 will become =100*(1.01^12) = $112.68
and the 10 you are contrributing at the beginning of every month wil be come
==FV(12%/12,12,-10,,1) = $128.10
Adding the 2 you get $240.78


The only thing I can think of is that you are compounding interest a
different way than the calculator. Is one monthly and one daily? Is it
simple or compound interest? Think about those.

Fred Smith

Two things:

1. The rate, term and payment must have the same period. Excel can't know
that your rate is annual, your term is days and your payment is monthly. It
is up to you to make them correspond.

2. The sign for PV and PMT identifies which way the cash is flowing: out of
your pocket (-ve) or into your pocket (+ve). In your case, both PV and PMT
are out of pocket, so the sign on both must be negative.

The new formula would be:

=FV(e6/12,(e20-e3)/365*12,-e4*0.1/12,-e5,1) which will use compound every
month, or
=FV(e6,(e20-e3)/365,-e4*.1,-e5,1) which will compound annually (probably the
better formula)

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question