Calculate monthly contributions

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Chris T. - 12 Jun 2007 06:45 GMT

How do you calculate an investment that has monthly contributions of, say
$200, every month with a 16% annual rate of return (i.e. $200 on June 1st,
$200 on July 1st, etc.)? This is so that I can get an idea of what the long
term investment will return. I would ideally like to use something like this
to track my personal savings/investment.

If there is another thread let me know.

Any help would be greatly appreciated.

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joeu2004 - 12 Jun 2007 08:49 GMT

On Jun 11, 10:45 pm, Chris T. <Chr...@discussions.microsoft.com>
wrote:

> How do you calculate an investment that has monthly contributions of, say
> $200, every month with a 16% annual rate of return (i.e. $200 on June 1st,
> $200 on July 1st, etc.)?

I assume that 16% is the APY -- that is, the expected compounded
rate. Then, the monthly rate can be computed with one of the
following equivalent formulas:

=rate(12,0,-1,1+16%)

=(1+16%)^(1/12) - 1

If 16% is the annual interest rate, the monthly rate is simply 16%/12.

> This is so that I can get an idea of what the long term investment will return.

Over 20 years, the balance of the investment would be:

=fv(A1, 12*20, -200, 0)

where A1 is the monthly rate (one of the above).

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