| What the name means | "Future Value of an annuity allowing for different periodicity of payments per year"
| | Syntax | FVM ( AnnPmt, PresentValue, InterestAER, TermYrs, PmtsPerYear )
| | Description | Calculates the Future Value of a simple annuity, taking into account that the annual payments specified may take place during the course of the year.
| | See Also | IntRateM (AnnPmt, PresentValue, TermYrs, PmtsPerYear, [FVOpt]) | | PmtM (PresentValue, InterestAER, TermYrs, PmtsPerYear, [FVOpt]) | | PVM (AnnPmt, InterestAER, TermYrs, PmtsPerYear, [FVOpt]) | | TermM (AnnPmt, PresentValue, InterestAER, PmtsPerYear, [FVOpt])
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| Variable | Type or Value | Description |
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Inputs: (5)
|
| 1
| AnnPmt
| Float
| Annual Payment
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| 2
| PresentValue
| Float
| The Net Present Value
|
| 3
| InterestAER
| Float
| Interest Rate expressed as an AER, Annual Equivalent Rate. See Annual Equivalent Rates
|
| 4
| TermYrs
| Float
| Term in years of loan, lease etc
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| 5
| PmtsPerYear
| Float
| Number of payments Per Year (eg +4 = qtrly in advance, -4 = qtrly in arrear)
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Output:
|
| Return Value
| FV
| Float
| The future value. FV is the cash balance you would want to attain on the last payment. Because of endemic confusion over the sign of FV (we use the same convention as Microsoft), take special care when inputting this variable.
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Defaults and Values The variable(s) of this function have certain defaults and/or switch values associated with them. Click here to see more. | Type of Value | Value | Description | Detail | | Example(s)
| PmtsPerYear | -1 | The usual case for financial functions in general. Payment at the end of the year.
| | | 4 | The usual case for property calculations - rent quarterly in advance.
| | | -4 | The usual case for loan interest, quarterly in arrears. |
Methodology | Sign Convention: BF follows Excel's sign convention, which can occasionally cause confusion.
- The PV of a +ve annual payment is -ve.
- The PV of a -ve annual payment is +ve.
- The FV of a +ve annual payment or a +ve PV is -ve.
- The FV of a -ve annual payment or a -ve PV is +ve.
The reason for this is that Excel uses the following equation to calculate PV's:
This is highly logical, but be aware of the apparent swapping in sign, particularly if you are using or solving for FV's, where the confusion gets more pronounced. Sorry about this, but we need to be compatible with Excel! |
Examples | - Preview of the FVM example.
- The above spreadsheet can be accessed from the Quick Reference (on the Business Functions menu), on the Examples menu, or in the Business Functions\Component Examples directory
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