Savings Goal: Future Value with FV
Your task: In B6:B8, work out the future value, the total paid in and the interest earned on the plan.
Full instructions, scenario and goal
Scenario
A young professional wants to build a deposit for a flat. She already has some savings, will add the same amount every month and expects a fixed annual return. She wants to know what the plan will be worth at the end, how much of it comes from her own money and how much is interest.
Your task
- The plan is in B1:B4: monthly deposit, annual return, years and the starting balance.
- In B6, calculate what the plan will be worth at the end, including the starting balance, with FV.
- In B7, calculate the total paid in: all the monthly deposits plus the starting balance.
- In B8, calculate the interest earned.
- Select Check Answer when you are done.
You are done when
- The future value uses monthly units and includes the starting balance.
- The total paid in is the deposits plus the starting balance.
- The interest is the value minus what was paid in.
What you will practise
Use FV with a regular payment and a starting balance, matching the rate and period units, and separate deposits from interest.
The idea in 30 seconds
FV(rate, periods, payment, present value) returns what a series of regular payments and a starting amount will be worth after compound interest. The rate and the number of periods must use the same unit: with monthly deposits, use the annual rate divided by 12 and the years multiplied by 12. The payment is the amount added each period; the optional fourth argument is a lump sum already in the account.
Spreadsheet
Loading spreadsheet…
Keyboard shortcuts
- Arrow keys
- Move between cells
- Shift + Arrow keys, or drag with the mouse
- Select a range
- Ctrl + Arrow keys
- Jump to the edge of a block of data
- Type, or F2, or double-click
- Edit a cell (F2 switches arrow keys between moving and editing)
- Click or arrow keys inside a formula
- Insert a cell reference after =, +, (, comma and similar
- F4
- Cycle a reference through A1, $A$1, A$1, $A1
- Enter / Tab while editing
- Confirm and move down / right (Shift reverses)
- Esc
- Cancel the edit
- Ctrl + C / X / V
- Copy, cut and paste (formulas adjust like in Excel)
- Delete
- Clear the selected cells
- Ctrl + Z / Ctrl + Y
- Undo and redo
- Ctrl + Enter
- Check your answer
- Tab when not editing
- Leave the spreadsheet
Type your answer in cell B6. Click a cell and type. Enter confirms, Esc cancels, Ctrl+Enter checks your answer.Tap a highlighted cell to type in it, then tap the green tick to confirm. Scroll the sheet sideways if it is wider than your screen.
New here? How an exercise works
- Read the task. Highlighted cells are yours to fill in; the rest are locked.
- Select (or tap) a highlighted cell and type a formula. It starts with =, like =A1+B1.
- Press Check answer. Stuck? Reveal hints one at a time.
The full explanation: the idea behind this exercise
FV(rate, periods, payment, present value) returns what a series of regular payments and a starting amount will be worth after compound interest. The rate and the number of periods must use the same unit: with monthly deposits, use the annual rate divided by 12 and the years multiplied by 12. The payment is the amount added each period; the optional fourth argument is a lump sum already in the account.
As with loans, Excel treats money you pay in as negative, so FV returns a positive value only when the payment and the starting balance are entered as negative numbers. Put a minus sign in front of the cells that hold deposits. Interest earned is what the plan is worth minus everything you paid in: the deposits plus the starting balance.
Skills you will practise
- FV
- Compound interest
- Savings
- Finance
Complete first: Monthly Loan Payment and Total Interest with PMT
Common mistakes to avoid
- Forgetting the starting balance
- It is the fourth argument of FV. Without it the plan is worth thousands less than it should be.
- Annual rate with monthly periods
- The rate and the number of periods must be in the same unit. Divide the rate by 12 and multiply the years by 12.