Cumulated expenses with inflation.
 

Hi,

I want to calculate expenses over a period of times.

My inputs are :
- Initial Expense (P[0])
- Number of month (n)

Currently I do not take inflation into acount so my formula is just:

Total Expense : S[n] = P[0]*n

Now, if I want to take inflation into account, my expenses would
increase for each period.
So I have one more input : R is the monthly inflation rate.

So the expense each month is : P[i]=P[i-1]*(1+R)=P[0]*(1+R)^i

An my total expense is S[n] = Sum(P[i],i=0..n) = P[0]*Sum((1+R)^i,
i=0..n)

How do I translate this in a Excel formula ?

Thank you

Cumulated expenses with inflation.
 

Yes, it's called FV (for future value). It will calculate exactly what you want.

=fv(rate,n,p[0],p[0])

Remember the period for rate and n must match, so the rate specified must be a
monthly rate.

--
Regards,
Fred


wrote in message
ups.com...[i]
Hi,

I want to calculate expenses over a period of times.

My inputs are :
- Initial Expense (P[0])
- Number of month (n)

Currently I do not take inflation into acount so my formula is just:

Total Expense : S[n] = P[0]*n

Now, if I want to take inflation into account, my expenses would
increase for each period.
So I have one more input : R is the monthly inflation rate.

So the expense each month is : P[i]=P[i-1]*(1+R)=P[0]*(1+R)^i

An my total expense is S[n] = Sum(P,i=0..n) = P[0]*Sum((1+R)^i,
i=0..n)

How do I translate this in a Excel formula ?

Thank you

Cumulated expenses with inflation.
 

Cumulated expenses with inflation.
 

Errata....

I wrote:
=fv(n, r, 0, -P[0])

Oops, got my "n" and "r" mixed up. The correct formula that
corresponds to yours (P[0]*Sum((1+R)^i, i=0..n)) is:

=fv(r, n, 0, -P[0])

Cumulated expenses with inflation.
 

Hum... funny I was looking at FV, but it only seemed to me that this
was used to calculate the final value of an investement with constant
payments...

Now I see that it actually is the same thing... my math is rusty...

Thanks



Fred Smith wrote:[i]
Yes, it's called FV (for future value). It will calculate exactly what you want.

=fv(rate,n,p[0],p[0])

Remember the period for rate and n must match, so the rate specified must be a
monthly rate.

--
Regards,
Fred


wrote in message
ups.com...[i]
Hi,

I want to calculate expenses over a period of times.

My inputs are :
- Initial Expense (P[0])
- Number of month (n)

Currently I do not take inflation into acount so my formula is just:

Total Expense : S[n] = P[0]*n

Now, if I want to take inflation into account, my expenses would
increase for each period.
So I have one more input : R is the monthly inflation rate.

So the expense each month is : P=P[i-1]*(1+R)=P[0]*(1+R)^i

An my total expense is S[n] = Sum(P,i=0..n) = P[0]*Sum((1+R)^i,
i=0..n)

How do I translate this in a Excel formula ?

Thank you