Excel Formula for compound interest for monthly deposits where deposits increase every year

0 votes

Simply expressed, I want to know how to access the Excel capability found on this page.

I attempted to use the FV function, but it does not appear to have support for annual payment increases.

The payment increase may be expressed in percentage points (as in the linked page) or even by a set sum each year (like "increase deposit by 10000 every year).

An illustration:
Year 1:

Monthly Deposit: 5000
No. of deposits in a year: 12
Interest rate: 10%
Interest compounded quarterly
Total deposited during the year: **60000**
Interest earned in first year: **3323**

Year 2:

Amount carried forward from first year: **603323** (principal + Interest)
Monthly Deposit: 5500 (increased by 10% or increased by a fixed value of 500 every year)
No. of deposits in a year: 12
Interest rate: 10%
Interest compounded quarterly
Total deposited during the year: 66000
Interest earned during year: 13552 (large, because we started the year with seed value from previous year)

and so on.

The FV function gives me the correct value for year 1, but I could not find a way to extrapolate it to increase investment every year.

Nov 26, 2022 in Others by Kithuzzz
• 27,160 points
77 views

1 answer to this question.

0 votes

It's possible that I don't understand how to calculate quarterly interest because I'm using Excel 2003. You should be able to adjust the monthly compound solution I have. To add further years, enter the year number in column A and copy and paste the formula into column B. The formula is =FV($B$2/12, $B$3, $B$4, +A9*$B$7, -$B9,$B$6) in cells b10. It increases the value in B7 to the payment rate for every additional year, using the previous year's outcome as the baseline.

Screenshot

answered Nov 26, 2022 by narikkadan
• 50,080 points

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