"Tamera George" wrote:
Find the future value of an investment of $5,000 made
today for the following
1,) 6.25 percent compounded semi-annually for twelve years
2.) 7.63 percent compounded quarterly for six years
3.) 8.9 percent compounded monthly for ten years
4.) 10 percent compounded daily for three years
5.) 8 percent compounded continuously for two years
I don't really want you to do the calculations for me,
[....] I just am trying to learn how to do the calculations
myself.

Good for you! :-)

Generally, the function to use is FV(rate,nper,pmt,pv). In your examples,
pmt is zero.

One key point is: pmt, pv and FV are signed amounts. Usually we use
positive for inflows and negative for outflows. But which is which depends
on your point of view: borrower or lender; investor or "bank". I usually
use negative pv so that FV is positive; then I chose the sign for pmt
relative to pv or FV.

Another key point is: rate, nper and pmt are __periodic__ amount based on
the compounding frequency. For example #3, the number of periods (months)
is 12*10.

Unfortunately, there are two schools of thought on how to convert an annual
rate to a periodic rate. You need to do it according to the method used by
the particular investment. Sometimes that is dictated by regional law.

For investments, the term "interest" usually refers to a simple rate,
whereas the term "yield" usually refers to a compounded rate. So, for
example #3, the monthly rate might be 8.9%/12 or (1+8.9%)^(1/12)-1,
depending on whether 8.9% is an "interest rate" or "yield".

The mathematical expression (1+8.9%)^(1/12)-1 "decompounds" (for want of a
better term) the effect of the compounded yield. Usually, it can be
calculated alternatively using RATE(n,0,-1,1+annualRate); for example,
RATE(12,0,-1,1+8.9%).

I say "usually" because the Excel RATE function sometimes returns an error
(#NUM or #DIV/0) if it is unable to "decompound" due to its iterative
algorithm. That should never happen when the second parameter is zero; but
I believe it does :-(. So I usually use the mathematical expression.

Putting that all together, your examples can be computed as follows,
assuming that the annual rates are simple "interest" rates:

1. =FV(6.25%/2,12*2,0,-5000)
2. =FV(7.63%/4,6*4,0,-5000)
3. =FV(8.9%/12,10*12,0,-5000)
4. =FV(10%/365,3*365,0,-5000)

Note for #4: Some people use 365.25 instead of 365. US law requires the
use of 365, although 366 can be used for leap years.

-----

5. 8 percent compounded continuously for two years

I saved this example for last because it is entirely different. It is
useful only in theoretical mathematics; for example, in the derivation of
Black-Scholes model.

The general formula is: pv*EXP(rate*nper).

Here, rate and nper can be annual amounts. Thus, nper might be a
non-integer. I have never seen a formula for continuous compounding with
periodic payments (pmt).

So for #5, the formula would be =5000*EXP(8%*2)