I try to find the Initial amount in compound interest. For instance, what should be the formula if I want to reach 100.000 in 50 years at an annual interest rate of 10%
Initial ?
Interest rate 0,10
Years 50
Future value 100.000
(This is just an example. I am looking for a formula that could be used with any numbers)
iMac
I am assuming 100.000 is 100 thousand and you use semicolons to separate parameters in functions.
The equation for determining the future value of an investment with interest is
FV = PV * (1+ Rate)^(Periods)
where
FV = future value
PV = present value
Rate = periodic interest rate as a %
Periods = the number of periods
Flipping that around to determine the required present value to achieve a given future value,
PV = FV/(1+Rate)^Periods = 100.000/(1+10%)^50 = $851,86
Or you can use the built-in PV function
=-PV(10%;50;0;100.000)
Note the minus sign. It goes either there or in front of the 100.000.
I am assuming 100.000 is 100 thousand and you use semicolons to separate parameters in functions.
The equation for determining the future value of an investment with interest is
FV = PV * (1+ Rate)^(Periods)
where
FV = future value
PV = present value
Rate = periodic interest rate as a %
Periods = the number of periods
Flipping that around to determine the required present value to achieve a given future value,
PV = FV/(1+Rate)^Periods = 100.000/(1+10%)^50 = $851,86
Or you can use the built-in PV function
=-PV(10%;50;0;100.000)
Note the minus sign. It goes either there or in front of the 100.000.
See the helpful examples at:
(also available via Help > Formulas and Functions Help in your menu)
In time value of money problems by convention a - or negative number denotes a cash outflow, whereas a positive number denotes a cash inflow.
So when the PV function gives a negative result it is simply saying you need to make that cash outflow now in order to have a cash inflow 50 years in the future of 100 thousand, assuming a 10% per annum interest rate.
Depending on how you are using the formula in the context of your document you may want to leave the result as a negative.
SG
Initial amound in compound interest
