What Is Future Value?
Future Value (FV) is the value of money at a specified point in the future after applying an assumed rate of growth over time.
For example, if you have $10,000 today and assume it grows at 7% per year, the future value calculation estimates what that amount could become after a chosen number of years.
Excel's FV function makes this useful for more than a single lump sum. It can also include regular contributions and can distinguish between payments made at the beginning or end of each period.
The FV Function in Excel
Excel's FV function is designed to calculate the future value of an investment using a constant interest rate and a series of payments, a starting amount, or both.
=FV(rate, nper, pmt, [pv], [type])
Each part of the formula represents a different input. Understanding those inputs is more important than memorizing the formula.
What Each FV Argument Means
The interest rate for each period. If your model uses monthly contributions, the rate should also be expressed monthly.
The total number of payment periods. Ten years of monthly contributions means 10 × 12 = 120 periods.
The regular payment or contribution made during each period. Use 0 when there are no regular payments.
The present value, or starting amount. This is the lump sum you already have at the beginning.
Payment timing. Use 0 for end-of-period payments and 1 for beginning-of-period payments.
Example 1: A $10,000 Lump-Sum Investment
Suppose you have $10,000 today, expect an annual rate of 7%, and do not plan to add any more money. You want to estimate its value after 15 years.
One starting investment, no regular contributions
| Input | Value |
|---|---|
| Annual interest rate | 7% |
| Number of years | 15 |
| Periodic payment (pmt) | $0 |
| Present value (pv) | -$10,000 |
Enter your inputs
Put the rate in B2, years in B3, payment in B4, and starting balance in B5.
Enter the FV formula
=FV(B2,B3,B4,B5)
The initial investment is entered as negative because it represents money paid into the investment.
At a constant 7% annual rate, $10,000 grows to approximately $27,590 after 15 years.
Example 2: Saving $300 Every Month
Now consider a regular savings plan. You deposit $300 at the end of every month, start with $0, and assume a 3% annual rate for eight years.
Monthly contributions for eight years
| Input | Excel value |
|---|---|
| Annual rate | 3% |
| Monthly rate | =3%/12 |
| Years | 8 |
| Total months | =8*12 |
| Monthly payment | -$300 |
| Present value | $0 |
Convert the annual rate to monthly
Monthly rate = 3% / 12 Number of periods = 8 × 12 = 96
The rate and the number of periods now use the same unit: months.
Enter the FV formula
=FV(3%/12,8*12,-300,0,0)
The final 0 means the deposits are made at the end of each month.
You contribute $28,800 over 96 months. The remaining amount represents the modeled growth.
Example 3: Starting Balance + Monthly Contributions
The FV function can also model an existing investment plus regular contributions. Suppose you start with $25,000, add $500 at the beginning of every month, and use an assumed 8% annual return for 20 years.
Starting investment plus beginning-of-month deposits
| Input | Excel value |
|---|---|
| Annual rate | 8% |
| Monthly rate | =8%/12 |
| Years | 20 |
| Total months | =20*12 |
| Monthly payment | -$500 |
| Present value | -$25,000 |
| Payment type | 1 — beginning of period |
Set the monthly rate and periods
Monthly rate = 8% / 12 Number of periods = 20 × 12 = 240
Use type = 1 for beginning-of-period payments
=FV(8%/12,20*12,-500,-25000,1)
Total contributions are $145,000: $25,000 initially plus $500 × 240 monthly contributions. The remaining balance is modeled growth.
Common FV Formula Mistakes
Do not combine an annual rate with a monthly number of periods. Convert both to the same time unit.
Use type 0 when payments occur at the end of a period and type 1 when they occur at the beginning.
Deposits and starting investments are generally entered as negative cash flows in an FV calculation.
FV is a mathematical projection. It does not predict the actual performance of an investment.
A basic FV calculation may not include taxes, fees, inflation, or changes in the contribution amount.
Why Does Excel Show a Negative FV?
Excel uses a cash-flow convention. Money paid into an investment is generally represented as a negative cash flow, while money received later is represented as positive.
Money going into the investment
Projected future value
Want to Calculate Future Value Without Building the Formula?
Use the FVCalculator Future Value Calculator to test different starting balances, contributions, rates, and investment periods without setting up an Excel worksheet.
Use the Future Value Calculator →Make Your Excel FV Model Easier to Reuse
If you expect to test several scenarios, keep your assumptions in separate cells rather than hard-coding numbers into the formula.
| Cell | Input | Example |
|---|---|---|
| B2 | Annual return | 8% |
| B3 | Years | 20 |
| B4 | Monthly contribution | -$500 |
| B5 | Starting balance | -$25,000 |
| B6 | Payment timing | 1 |
Once the inputs are separated, you can change the assumptions and immediately see how the projected future value changes.
The Bottom Line
Excel's FV function is useful when you want to turn a few assumptions into a future-value estimate. The formula is short, but the inputs need to be consistent.
Start by deciding whether your situation involves a lump sum, regular contributions, or both. Then make sure the rate and number of periods use the same time unit. Finally, check whether payments happen at the beginning or end of each period.
Frequently Asked Questions
What is the FV function in Excel?
FV is Excel's Future Value financial function. It estimates the future value of an investment using a constant rate, regular payments, a starting value, or a combination of these.
What is the Excel FV formula?
The syntax is FV(rate, nper, pmt, [pv], [type]).
How do I calculate future value with monthly payments?
Convert the annual rate to a monthly rate and multiply the number of years by 12. For example, a 6% annual rate becomes 6%/12 per month and five years becomes 60 monthly periods.
What does type 0 mean in the FV formula?
Type 0 means payments are made at the end of each period. It is also the default when the type argument is omitted.
What does type 1 mean in the FV formula?
Type 1 means payments are made at the beginning of each period.
Why does Excel use negative numbers in FV calculations?
Excel uses cash-flow signs. Money paid into an investment is generally entered as a negative cash flow, while money received later is positive.
Is future value the same as actual investment growth?
No. Future value is a mathematical projection based on the assumptions you enter. Actual investment performance can vary.
References
For the FV function syntax, payment timing, and Excel's financial-function conventions, see Microsoft's official FV function documentation.