The Excel FV Function

Related Functions:

FVSchedule
PV

Function Description

The Excel FV function calculates the Future Value of an investment with periodic constant payments and a constant interest rate.

The syntax of the function is:

FV( rate, nper, [pmt], [pv], [type] )

Where the arguments are as follows:

rate	-	The interest rate, per period.
nper	-	The number of periods for the lifetime of the annuity.
[pmt]	-	An optional argument that specifies the payment per period. (Note that if the [pmt] argument is omitted it uses the default value 0).
[pv]	-	An optional argument that specifies the present value of the annuity - i.e. the amount that a series of future payments is worth now. (Note that if the [pv] argument is omitted, it takes on the default value 0).
[type]	-	An optional argument that defines whether the payment is made at the start or the end of the period. The [type] argument can have the value 0 or 1, meaning: 0 - the payment is made at the end of the period; 1 - the payment is made at the start of the period. If the [type] argument is omitted, it takes on the default value of 0 (denoting payments made at the end of the period).

Cash Flow Sign Convention:

Note that, in line with the general cash flow sign convention, cash outflows are represented by negative numbers and cash inflows are represented by positive numbers. This is seen in the examples below.

Excel FV Function Examples

The following spreadsheets show the Excel FV function, used to calculate the future value of two different investments.

Example 1

In the following spreadsheet, the Excel Fv function is used to calculate the future value of an investment of $1,000 per month for a period of 5 years. The present value is 0, the interest rate is 5% per year and the payments are made at the end of each month.

Formula:

	A
1	Future value of an investment of $1,000 per month over 5 years, with a present value of $0, and an interest rate of 5% per year (payment made at end of each mth):
2	=FV( 5%/12, 60, -1000 )

Result:

	A
1	Future value of an investment of $1,000 per month over 5 years, with a present value of $0, and an interest rate of 5% per year (payment made at end of each mth):
2	$68,006.08

Note that, in this example:

The payments are made monthly, so it is necessary to supply the annual interest rate of 5% as a monthly interest rate (=5%/12), and to express the 5-year period as a number of months (=60).
As the present value is zero, and the payment is to be made at the end of the month, the [pv] and [type] arguments can be omitted from the above function.
As the monthly payments are paid out, they are input to the function as negative values.

Example 2

In the example below, the Excel Fv function is used to calculate the future value of an investment of $2,000 per quarter for a period of 4 years. The interest is 10% per year and each payment is made at the start of the quarter.

Formula:

	A
1	Future value of an investment of $2,000 per quarter over 4 years, with a present value of $0, and an interest rate of 10% per year (payment made at start of each qtr):
2	=FV( 10%/4, 16, -2000, 0, 1 )

Result:

	A
1	Future value of an investment of $2,000 per quarter over 4 years, with a present value of $0, and an interest rate of 10% per year (payment made at start of each qtr):
2	$39,729.46

Note that, in this example:

The payments are made quarterly, so the annual interest rate of 10% has been converted into a monthly rate (=10%/4), and the 4-year period has been input as a number of quarters (=16).
Again the quarterly payments are paid out, and so are input to the function as negative values.

For further details and examples of the Excel Fv function, see the Microsoft Office website.

Fv Function Errors

If you get an error from the Excel Fv Function, this is most likely to be the #VALUE error:

Common Error

#VALUE!

Occurs if any of the supplied arguments are non-numeric.

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