Excel

How to Use the FV Function in Excel (Step-by-Step Guide with Examples)

 

Ever wondered how much your savings will grow in 10 years, or what the future value of monthly deposits will be? Excel’s FV function (Future Value) helps you calculate exactly that.

Whether you’re planning for retirement, analyzing investments, or managing loans, the FV function is one of the most useful financial tools in Excel.

Contents
  1. 🔍 What is the FV Function?
  2. ✅ Example 1: Saving with Regular Deposits
  3. ✅ Example 2: One-Time Investment
  4. ✅ Example 3: Payments at Beginning vs. End
  5. ✅ Example 4: Combining PV and FV
  6. 🎯 Practical Uses of FV
  7. 📝 Conclusion

🔍 What is the FV Function?

The FV function returns the future value of an investment or loan, based on constant interest rates and periodic payments.

Syntax:

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

  • rate → Interest rate per period.

  • nper → Total number of periods.

  • pmt → Payment made each period (constant).

  • pv (optional) → Present value, or starting balance (default is 0).

  • type (optional) → When payments are due:

    • 0 = End of period (default).

    • 1 = Beginning of period.

💡 Tip: FV results often appear negative because they represent outgoing payments. Use a negative sign in pmt or pv to return a positive result.

✅ Example 1: Saving with Regular Deposits

You deposit $200 each month for 5 years in an account with 6% annual interest (0.06/12 monthly).

Formula:

=FV(0.06/12, 60, -200, 0, 0)

Result: $13,931

✔️ Explanation: By saving $200 monthly, your account grows to nearly $14,000 in 5 years.

✅ Example 2: One-Time Investment

You invest $10,000 today at an 8% annual interest rate for 10 years.

Formula:

=FV(0.08, 10, 0, -10000)

Result: $21,589

✔️ Explanation: Your one-time $10,000 investment doubles in 10 years at 8%.

✅ Example 3: Payments at Beginning vs. End

You save $1,000 annually for 5 years at 5% interest.

  • End of year payments (default):

=FV(0.05, 5, -1000, 0, 0)

Result: $5,526

  • Beginning of year payments:

=FV(0.05, 5, -1000, 0, 1)

Result: $5,802

✔️ Explanation: Payments made at the start of each period earn more interest.

✅ Example 4: Combining PV and FV

Suppose you invest $5,000 now plus $100 monthly for 3 years at 4% interest.

Formula:

=FV(0.04/12, 36, -100, -5000)

Result: $9,167

✔️ Explanation: FV calculates the total future value of both the initial investment and monthly deposits.

🎯 Practical Uses of FV

  1. Retirement Planning → Estimate how much your savings will grow.

  2. Loan Analysis → See the total future value of repayments.

  3. Education Savings → Plan for college funds.

  4. Investment Projections → Forecast returns with different interest rates.

📝 Conclusion

The FV function is essential for anyone who wants to plan financially using Excel. Whether you’re depositing monthly into a savings account, making one-time investments, or analyzing loans, FV helps you see the future value of your money.

👉 Combine FV with PV and NPV to build a full financial analysis toolkit in Excel.

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