![]() ![]() Note that our interest rate (in B3) was entered into that cell as 0.10 (or, you could type 10%).So, if this problem had said that the compounding was monthly (annual was implied), then we would have typed =FV(B3/12,B2*12,0,-B1). In Excel functions, you must set NPer to be the total number of periods, Rate to be the interest rate per period, and PMT to be the annuity payment per period. This is actually a good thing, in my opinion, because those settings on financial calculators cause all kinds of trouble when people forget to set them correctly. Note that, unlike most financial calculators, there is no argument to set the compounding frequency.If you had typed =FV(B3,B2,0,-B1,1) you would have gotten the same answer. When solving lump sum problems such as this, the argument has no effect. This argument is identical to setting your financial calculator to End Mode or Begin Mode, and only affects the answer when there is an annuity payment. In all of these functions, the Type argument tells Excel when the first cash flow occurs (0 if at the end of the period, 1 if at the beginning). Note that we left out the optional Type argument. ![]() In this case, we did not have an annuity payment (PMT), so the third argument in the FV function was set to 0. Be sure that any variables not in the problem are set to 0, otherwise they will be included in the calculation. In this case, we have a 4-variable problem and were given 3 of them (Nper, Rate, and PV) and had to solve for the 4th (FV). Of these, you will always be given 3 or 4 and asked to solve for the other.
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