Formula for figuring compound interest
 

Hi,
I need a formula for figuring out a retirement saving plan for my Grandson.
He wants to start by depositing $250.00 initial investment and adding
$50.00 per month for 40 years. If he earns 5.0% interest compounded monthly
how much will he have in 40 years? Any help with this formula will be
greatly appreciated. Thanks. Starlin

Formula for figuring compound interest
 

Starlin,

=FV(5%/12,40*12,-50,-250)

HTH,
Bernie
MS Excel MVP


"Msnews.Microsoft.Com" wrote in message
...
Hi,
I need a formula for figuring out a retirement saving plan for my Grandson. He wants to start by
depositing $250.00 initial investment and adding $50.00 per month for 40 years. If he earns 5.0%
interest compounded monthly how much will he have in 40 years? Any help with this formula will be
greatly appreciated. Thanks. Starlin

Formula for figuring compound interest
 

One way:

=FV(5%/12, 12*40, -50, -250)

In article ,
"Msnews.Microsoft.Com" wrote:

Hi,
I need a formula for figuring out a retirement saving plan for my Grandson.
He wants to start by depositing $250.00 initial investment and adding
$50.00 per month for 40 years. If he earns 5.0% interest compounded monthly
how much will he have in 40 years? Any help with this formula will be
greatly appreciated. Thanks. Starlin

Formula for figuring compound interest
 

Hi Starlin,

Try this

=-FV(0.05/12,40*12,50,250,0)

This uses the future value formula in excel and FV is defined as:

FV(rate,nper,pmt,pv,type)

Rate is the interest rate per period. here 5% / 12 (or 0.05 / 12)

Nper is the total number of payment periods in an annuity. here 40 X 12

Pmt is the payment made each period; it cannot change over the life of the
annuity. Typically, pmt contains principal and interest but no other fees or
taxes. here $500

Pv is the present value, or the lump-sum amount that a series of future
payments is worth right now. If pv is omitted, it is assumed to be 0 (zero),
and you must include the pmt argument. Here $250

Type is the number 0 or 1 and indicates when payments are due. If type is
omitted, it is assumed to be 0.

Set type equal to If payments are due
0 At the end of the period
1 At the beginning of the period

This I assume to be 0 the first payment is made at the end of the first month

The formula works on balances so just put a -ve infront of the formula.

--
Hope this helps
Martin Fishlock, Bangkok, Thailand
Please do not forget to rate this reply.


"Msnews.Microsoft.Com" wrote:

Hi,
I need a formula for figuring out a retirement saving plan for my Grandson.
He wants to start by depositing $250.00 initial investment and adding
$50.00 per month for 40 years. If he earns 5.0% interest compounded monthly
how much will he have in 40 years? Any help with this formula will be
greatly appreciated. Thanks. Starlin

Formula for figuring compound interest
 

Thank you for all of you help. This is just what I needed.

Starlin

"Martin Fishlock" wrote in message
...
Hi Starlin,

Try this

=-FV(0.05/12,40*12,50,250,0)

This uses the future value formula in excel and FV is defined as:

FV(rate,nper,pmt,pv,type)

Rate is the interest rate per period. here 5% / 12 (or 0.05 / 12)

Nper is the total number of payment periods in an annuity. here 40 X 12

Pmt is the payment made each period; it cannot change over the life of
the
annuity. Typically, pmt contains principal and interest but no other fees
or
taxes. here $500

Pv is the present value, or the lump-sum amount that a series of future
payments is worth right now. If pv is omitted, it is assumed to be 0
(zero),
and you must include the pmt argument. Here $250

Type is the number 0 or 1 and indicates when payments are due. If type
is
omitted, it is assumed to be 0.

Set type equal to If payments are due
0 At the end of the period
1 At the beginning of the period

This I assume to be 0 the first payment is made at the end of the first
month

The formula works on balances so just put a -ve infront of the formula.

--
Hope this helps
Martin Fishlock, Bangkok, Thailand
Please do not forget to rate this reply.


"Msnews.Microsoft.Com" wrote:

Hi,
I need a formula for figuring out a retirement saving plan for my
Grandson.
He wants to start by depositing $250.00 initial investment and adding
$50.00 per month for 40 years. If he earns 5.0% interest compounded
monthly
how much will he have in 40 years? Any help with this formula will be
greatly appreciated. Thanks. Starlin