When it comes to saving or spending, a number of concepts include a cash flow each year, or period in question. An annuity formula best summarizes how to address these matters in Excel. (Related: What Is An Annuity? - Video )
Here is both a present and future value formula for an annuity:
PV = C((1 - 1 / (1 + r)t / r)
In the below example, an individual is able to save $10,000 per year for 10 years in the stock market and earn an estimate 10% per year. The present value of that savings program is $61,445.
The future value of that savings program is $159,374. At the end of that 10 year program, the savings will have grown to nearly $160,000.
Guide To Excel For Finance: Valuation Methods
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