When using EXCEL to find the future value of $2,000 invested in an account that would earn interest of 7.5% for 18 years, the correct entry would be
A) =FV(7.5,18,0,-1,000).
B) =PV(.075,18,0,-1,000).
C) =FV(7.5,18,0,1,000).
D) =FV(.075,18,0,-1,000).

Question

Quizplus · Accepted Answer

The correct formula for calculating the future value in Excel is =FV(rate, nper, pmt, pv), where 'rate' is the interest rate per period, 'nper' is the number of periods, 'pmt' is the payment made each period, and 'pv' is the present value. The interest rate should be expressed as a decimal (7.5% as .075), and the present value should be negative if it represents an outflow (investment). Therefore, the correct entry is =FV(.075,18,0,-2000), not -1,000 as in the options provided. However, based on the given options, D is the closest correct answer, despite the typo in the present value amount.

When Using EXCEL to Find the Future Value of $2,000