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<ul><li>For learning Microsoft Excel’s  Future Value  Function we need to have a very basic understanding of Time Value of...
Before Going ahead just see Cash Inflow / Outflow Concept <ul><li>Whenever we work with any financial function, we need to...
Scenario 1 <ul><li>I have a daughter she is 3 years old, if I want to save for her education plan. </li></ul><ul><li>I am ...
Payment (PMT): This is the fix amount which I can save in each interval in this case the interval is year No of Periods (N...
Scenario 1 - Practical Example Outflow: As discussed in the first slide it is an outflow so represented it in negative
Scenario 2 <ul><li>Say I have received 100,000 from my Dad </li></ul><ul><li>I want to save the same to my bank account fo...
Present Value (PV): Note, that in this example I don’t have any equal payment amount but this time I have a single amount ...
Scenario 2 - Practical Example Optional Parameter: As you can see as I don’t have the payment parameter I have left it by ...
Conclusion <ul><li>Future Value Function is used to calculate future value of any investment </li></ul><ul><li>You can ent...
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Future Value Financial Function - Microsoft Excel

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This presentation explains the Future Value Function which is one of the Microsoft Excel's Financial Function, it describes the same with scenarios & examples

Published in: Economy & Finance, Business

Future Value Financial Function - Microsoft Excel

  1. 2. <ul><li>For learning Microsoft Excel’s Future Value Function we need to have a very basic understanding of Time Value of Money </li></ul><ul><li>Instead learning this the bookish way, we will understand the same concept with practical scenarios </li></ul>
  2. 3. Before Going ahead just see Cash Inflow / Outflow Concept <ul><li>Whenever we work with any financial function, we need to use the cash inflow or outflow: </li></ul><ul><li>Inflow: </li></ul><ul><ul><li>Cash inflow means that the cash which is received by you through any source and it will represented in Excel as positive value </li></ul></ul><ul><li>Outflow: </li></ul><ul><ul><li>Cash outflow means the cash which is going out of your pocket either it is a saving which you are putting into the bank or you are paying your dues and it is represented in Excel as negative value </li></ul></ul>
  3. 4. Scenario 1 <ul><li>I have a daughter she is 3 years old, if I want to save for her education plan. </li></ul><ul><li>I am able to save 10,000 each year for her </li></ul><ul><li>I need the money when she will be 16 years old, i.e. I have 13 years in my hands </li></ul><ul><li>The bank offers me 10% per anum cumulative interest for the savings </li></ul>
  4. 5. Payment (PMT): This is the fix amount which I can save in each interval in this case the interval is year No of Periods (NPER): This is the number of periods for which I am planning the saving for Interest (RATE): The interest rate which the bank will offer me for this savings
  5. 6. Scenario 1 - Practical Example Outflow: As discussed in the first slide it is an outflow so represented it in negative
  6. 7. Scenario 2 <ul><li>Say I have received 100,000 from my Dad </li></ul><ul><li>I want to save the same to my bank account for a period of 10 years </li></ul><ul><li>My Bank offers me 12% per anum cumulative interest for this saving </li></ul>
  7. 8. Present Value (PV): Note, that in this example I don’t have any equal payment amount but this time I have a single amount in my hand that is why I am treating it as Present Value and will not use the Payment (PMT) parameter No of Periods (NPER): This is the number of periods for which I am planning the saving for Interest (RATE): The interest rate which the bank will offer me for this savings
  8. 9. Scenario 2 - Practical Example Optional Parameter: As you can see as I don’t have the payment parameter I have left it by entering a 0 instead of payment value Outflow: As I am going to deposit the same to the bank and it is an outflow so represented it in negative
  9. 10. Conclusion <ul><li>Future Value Function is used to calculate future value of any investment </li></ul><ul><li>You can enter inflow amount in positive and outflow in negative </li></ul><ul><li>Investment may be in form of full amount once (Present Value [PV]) or in equal installments (Payment [PMT]) </li></ul><ul><li>This function of the Future Value takes 4 parameters Present Value, Payment, Rate & Number of Periods </li></ul><ul><li>Please Visit: </li></ul><ul><li>www.exceladvise.com </li></ul><ul><li>For more </li></ul>Please comment if you like it, or have any suggestions. Photo Courtesy – www.freedigitalphotos.net

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