FVIFA Excel Function
Written by:Abraham A.What is FVIFA
Assume you have made an annual deposit of $1 into a savings account that pays an interest of 5% per annum. Let us say that you deposited $1 in your savings account at the end of each of the next 10 years. Your account will earn interest not only on the deposits of $1 you invested but also on the interest earned in prior years. FVIFA will be the amount of money shown as the closing balance of your account at the end of 10 years.
Compound Interest
As stated earlier compound interest is the interest earned on deposit plus interest on interest. Compounding of interest may be either discrete or it may be continuous compouding. When interest is calculated per period such as per year, per quarter, per month or per day then it is referred to as periodic or discrete compounding of interest. Yet modern banking permits calculation of interest on continuous scale, this is referred to as continuous compounding of interest. Excel functions only provide results when interest is compounded discretely.
FVIFA MS Excel Example
This article http://support.microsoft.com/kb/141695 from Official Microsoft Excel Support states that "Microsoft Excel does not include a function for determining compound interest".
The Solution
tadFVIFA Excel function calculates compound amount earned on periodic end of period deposits of $1 using either discrete or continuous compounding of interest. No VBA programming required. tadFVIFA Excel function is part of the TADXL Excel add-in for finance, that provides numerous financial functions that are not currently available in Excel. tadFVIFA accepts the following four values
- RATE
refers to the periodic interest rate - NPER
refers to the number of periods - TYPE
refers to either 0 for end of period deposits or to 1 for start of period deposits - Compounding
refers to either 0 for discrete compounding of interest or to 1 for continuous compounding of interest
| A | B | C | |
| 1 | RATE | 5% | 5% |
| 2 | NPER | 10 | 10 |
| 3 | TYPE | 0 | 0 |
| 3 | Compounding | 0 | 1 |
| 4 | TADXL | =tadFVIFA(B1, B2, B3, B4) | =tadFVIFA(C1, C2, C3, C4) |
| 5 | FVIFA | 12.57789 | 12.65277 |
You can try out the sample FVIFA calculation in Excel as shown in the previous example. If Excel reports the #NAME error when you enter the =tadFVIFA(B1, B2, B3, B4) function in cell B4, then you must install TADXL Add-in for finance to see the results of compound interest calculation using tadFVIFA function. TADXL is an Excel Add-in for finance, that contains many financial functions which are not provided by Excel. Go ahead and download TADXL now.
Related Interest factors Excel functions
Following is a list of related Excel functions that cover other interest factors used in financial management:FVIFA Calculator
You can opt to use this FVIFA Calculator that calculates not only FVIFA but also the interest rate and number of periods from future value annuity factor. The FVIFA calculator permits you to select from discrete and continuous compounding of interest.
FVIFA Table
Get yourself a FVIFA PDF download file that tabulates future value annuity factor of a $1 at interest rates ranging from 1% to 50% for number of periods ranging from 1 to 50. The FVIFA table comes in an easy to read format where alternating rows are highlighted in contrasting colors. A must have for any financial analyst, business student, and other accounting professionals.
FVIFA on ba ii plus
TI BA II plus is a popular financial calculator manufactured by Texas Instruments. FVIFA on BA II plus may be found using the time value of money function keys. This tutorial guides you on how to find FVIFA on BA II plus.