Excel in Personal Finance - Part 2 - Function FV

Let us learn 5 Excel functions that are useful for personal finance

Click here to read: Introduction to Excel in Personal Finance
Click here to read: Excel Part 1 - Function PV

Function 2 - FV

FV - Calculating the required amount:

Radha thinks he can buy a house in 10 years. Current price is  40  lakhs. Expected Inflation is 7%. Then how much money should he save now to buy a house in ten years?

For this planning, before using Excel, we should better understand the factors/variables that have been used in the Excel function and correctly enter the numbers by input for those functions. The factors  used in the Excel distribution FV and in most of the financial functions, are given below

• "Rate" refers to rate of interest .
• "Nper" refers to the number of months / year in which the amount is paid in the SIP.
• The PMT is The amount of money we pay monthly.
• PV is the initial sum paid.
• FV is the amount available / received  at the end.
• "Type" is often taken as zero or one. (If the interest is paid upfront or at the end of the period)

To know the amount by FV: the interest rate is 7%, the period is ten years and the value is 40 lakhs.

Using FV function we are arriving the amount required after 10 years.

Used factors / variable:

Information to input:

If you submit the required inputs as shown above, the excel will calculate the FV. Here we get that the future price of the house is Rs 78,68,605 after 10 years.

You can understand how to enter the Excel role by looking at the following picture. In your computer, the cell number / reference may be different, but the input information must be exactly as shown in the picture with respect to variable as given in the problem.

Please click here to get the working model of this function in google sheet – you can try hands on using different variables suitable to your requirements.

Click here to read the NEXT article about using EFFECT function: Example: In the case of bank deposits, the Bank gives an annual interest of 7%. Here is the variation. One bank gives interest once a year. Another bank gives interest every six months but at the same 7% annual interest rate. If another bank gives interest once every three months, then we have to choose the bank who gives interest for a short period of time. This will give higher yield, which is slightly better than 7% per annum. Let us find how yield differs from bank to bank in the above example using excel effect function.

Click here to read the PREVIOUS article about using PV function : Karthik is planning to visit Europe in 5 years on estimated expense of 15 Lakhs. Read the article to find out how much he needs to invest now in lumpsum?