Future Value of Unequal Payments

[bsutton]

Does anyone know a formula that calculates the future value of an unequal payment stream? I am attempting to calculate the value of an investment plan where the periodic payment increases by 1% each period. I can get the answer by using the FV formula for each payment and then adding them up, but would like to be able to do it without having to do so.

Thanks.

 

[tusharm]

Joe,

So far you have shared three different answers w/o explaining how you got any of them. By contrast bsutton and I have shared how we calculated the results.

You should share the method by which you get whichever answer you currently believe to be the correct one if you expect others to understand what you did and subsequently use it in their own work.

are you considering monthly compounding?

the answer is not $2,586,855 , it is $2,601,962.676 for monthly compounding

 

[Morovis]

Does anyone know a formula that calculates the future value of an unequal payment stream? I am attempting to calculate the value of an investment plan where the periodic payment increases by 1% each period. I can get the answer by using the FV formula for each payment and then adding them up, but would like to be able to do it without having to do so.

Thanks.

The Excel NPV formula allows you to get the Present Value of a string of unequal payments. After you get the Present Value (which is a single value), you can use the FV Future Value formula to get the future value at whatever future date you want. So, this is not a single step method, but a two-step method to get the answer for the future value of an unequal payment stream. A problem with these Excel methods is that the same interest rate is used for each period. You can't have varying interest rates as the years go by. Use a small set of values using the FV formula for each payment and adding them up as you describe, and then use the two-step NPV-then-FV method and see that you get the same answer.