Forum Discussion
Future Value function help
Andymunchin What stops you from checking the FV function results by advancing one year at the time?
The first year, 5000 at 5.5% will have increased to 5275, being 5000 X (1+0.055)
The next year you start with 5275 and add another 5000 = 10275. In turn, this will increase to 10275 X (1+0.055) = 10840.
Due this over a 20 year period and you'll end up with 183940. Why would that seem high? You can do a quick sanity check without even using a calculator. You invested 20 X 5000 = 100000 and earned at least 5.5% over an average balance of 50000 throughout this period. That gets you to 160000 to start with. Understanding the impact of compound interest (interest over interest) you should feel that 183940 isn't extra-ordinary. But you can always check it with a simple year by year model as in the attached workbook. Had your formula come up with half a million, then that should have raised a red flag.
Now as to why you sometimes get ######. Probably because the column width is too narrow for the result to be displayed.
And why you sometimes get 0's and errors. Hard to tell if you don't show your workbook and formulas. You probably need some absolute references in case you drag down formulas.
Andymunchin What stops you from checking the FV function results by advancing one year at the time?
The first year, 5000 at 5.5% will have increased to 5275, being 5000 X (1+0.055)
The next year you start with 5275 and add another 5000 = 10275. In turn, this will increase to 10275 X (1+0.055) = 10840.
Due this over a 20 year period and you'll end up with 183940. Why would that seem high? You can do a quick sanity check without even using a calculator. You invested 20 X 5000 = 100000 and earned at least 5.5% over an average balance of 50000 throughout this period. That gets you to 160000 to start with. Understanding the impact of compound interest (interest over interest) you should feel that 183940 isn't extra-ordinary. But you can always check it with a simple year by year model as in the attached workbook. Had your formula come up with half a million, then that should have raised a red flag.
Now as to why you sometimes get ######. Probably because the column width is too narrow for the result to be displayed.
And why you sometimes get 0's and errors. Hard to tell if you don't show your workbook and formulas. You probably need some absolute references in case you drag down formulas.
It seemed high to me, but I am apparently not experienced enough with investments and such, it seems to me.
I did expand the column width and a time or two earlier I got an insanely high number, like half the page, so clearly not the right answer.
I tried with absolute formulas as well.
I think I got it though.
Thanks for the help.
I was alternating between phone and computer and don't have internet for my computer at my place, so wasn't able to show it on here.
I will keep that in mind for if there is a next time I need help on an issue.
Thanks again, good advice. I know it takes time with Excel, but wish I was better at it. I'll keep chugging along though.