FV with payments at the start of each month
The type argument: paying in a month earlier earns a month more interest.
Task:
Two savers each put 200 a month into an account paying 5% a year for 10 years. One pays at the end of each month, the other at the start. In B6 and C6 give each one's final balance, as positive figures.
Interactive Spreadsheet
Hints
+5 XPno-hints bonusSolve it on your own to keep the bonus. Each hint gets one step closer to the formula.
Variations of FV
0/3The same formula in the other shapes it takes at work.
- FV Function
Calculate the future value of an investment using the FV function.
CoreAdvanced - FV of a one-off deposit
Put money in once and leave it: pmt is 0, pv is the deposit.
Advanced - FV with payments at the start of each month
The type argument: paying in a month earlier earns a month more interest.
Advanced
The data in this exercise
This is the grid you start with. Cell references in the task — B6, C2 — point at the row numbers and column letters below.
| A | B | C | |
|---|---|---|---|
| 1 | End of month | Start of month | |
| 2 | Annual rate | 0.05 | 0.05 |
| 3 | Years | 10 | 10 |
| 4 | Monthly saving | 200 | 200 |
| 5 | Type | 0 | 1 |
| 6 | Final balance |
What this exercise teachesMay contain the answer
Paying at the start of the month gives every deposit one extra month of interest, so the second saver ends about 130 ahead from exactly the same money. Leases and rent are usually paid in advance, which is where type 1 most often matters.