The FVSCHEDULE function in Excel is a powerful tool designed to compute the future value of an investment based on an initial principal amount and a series of compound interest rates. This function is particularly useful for financial analysts and investors looking to assess the potential growth of their investments over time, taking into account varying interest rates that may apply during the investment period.

Syntax

FVSCHEDULE(principal, rates)

• principal: The initial amount of money to be invested or loaned.
• rates: An array or a reference to a range of cells that contain the interest rates applicable to each period.

Example #1

FVSCHEDULE(1000, {0.05, 0.10, 0.08})

In this example, the FVSCHEDULE function calculates the future value of $1,000 after applying a 5% interest rate for the first year, 10% for the second year, and 8% for the third year. The result is approximately $1,268.24.

Example #2

FVSCHEDULE(2000, A1:A3)

Assuming cells A1 to A3 contain interest rates of 4%, 6%, and 5%, this function computes the future value of $2,000 after applying each of those rates for consecutive periods. The result would be approximately $2,563.25.

Example #3

FVSCHEDULE(5000, {0.07, 0.05})

Here, the function finds the future value of $5,000 after applying a 7% interest rate for the first year and 5% for the second. The resultant future value would be about $5,775.00.

Error handling

• NUM!: This error occurs if the ‘rates’ parameter contains non-numeric values. Ensure all rates are percentages in numeric form.
• VALUE!: This indicates that the ‘principal’ value is invalid. Make sure it is a valid number.
• REF!: This error arises when a cell reference in the ‘rates’ parameter is not valid. Double-check that the reference points to a valid range.

Conclusion

The FVSCHEDULE function is an essential tool for anyone dealing with investments, providing precise computations of future values based on changing interest rates. By leveraging this function, users can effectively evaluate their financial strategies and make informed decisions regarding their investments to maximize returns.