FV Function (Future Value Function)

[UsmanKhalid]

Hi,

I am having an issue in using FV (Future Value) function in Excel. I am suppose to be comparing four different plans. FV function works fine for three of them. I am hoping someone to have a look at my Excel sheet and let me know where I am making a mistake?

Regards

 

[joeu2004]

based on NPV the way that __I__ believe it should be calculated. That is, we should always discount to age 61 for an apples-to-apples comparison; thus, we must always compound that NPV over 25 years.
Aside.... By calculating the NPV in that manner, it is not necessary to calculate the FV. The better plan is the one with the larger NPV.

I should note that that assumes you correct your use of NPV vis-a-vis the interpretation of initial cash flows that are empty cells.

When you wrote NPV(A2,I5:I28), I presumed that your intent was to calculate the NPV back to age 61 (row 4).

But because I5:I9 are empty cells, Excel NPV effectively calculates NPV(A2,I10:I28), back to age 66.

In order to calculate the NPV back to age 61, which I believe is the right thing to do for an apples-to-apples comparison of all plans, we must put zeros into I5:I9.