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The Excel FV function calculates the future value (e.g., the remaining amount) of a loan or investment at a point in time in the future. The function assumes constant payments (or cashflow if an investment) will be made. The FV function is an Excel financial function.
=FV(rate, nper, pmt, [pv], [type])
rate = the interest rate
nper = the number of periods (term of the loan, e.g., years, months) into the future for which the future value is being calculated
pmt = the payment per period
pv = [optional] the present value of the loan. Usually this is the initial value of the loan. If left blank it will default to 0.
type = [optional] 1 = payment at the beginning of the period, 0 = payment at the end of the period, if omitted it will default to end of period
Note: the pmt and nper inputs should be aligned, meaning that if the nper is entered in years, the pmt should be an annual payment.
The FV function returns the future value for a loan or investment with constant payments or cashflow, at a point in time in the future.
In the example above the FV function calculates the future value for a loan with the terms listed in cells C5, C7, and C11. In this example, the initial loan was $1,000, the loan annual payment is $200, and the interest rate is 7%. We will calculate the future value (or the remaining loan balance) four years into the future, so nper is set to 4.
=FV(C11, C9, C7, -C5)
Note: A minus sign “-” is entered before the pmt argument (C5) because the payment is a negative cashflow (a payment from you to someone else). If a minus sign is not entered the function will not return the correct answer.
The result returned is $422.81, which is the future value or remaining loan amount four years from now.