Microsoft Excel Tutorial: Future Value Functions and Pensions

This video tutorial covers the concept of future value functions and pensions, focusing on calculating the future value of investments using Excel. It provides a detailed example of calculating the maturity amount of a principal investment with a given interest rate and term. The tutorial explains the formula components, including interest rate, number of payments, and present value, and demonstrates how changes in interest rates affect the future value. The session concludes with a summary of key concepts and encourages viewers to ask questions if needed.

What is the primary purpose of using future value functions in finance?

• To calculate the depreciation of an asset

• To assess the risk of an investment

• To determine the future value of an investment

• To calculate the present value of an investment

In the example provided, what is the interest rate used for calculating the future value?

• 10%

• 18%

• 12%

• 15%

What does the term 'cumulative FT' imply in the context of calculating interest?

• Interest is calculated on both principal and accumulated interest

• Interest is calculated only on the principal

• Interest is calculated on a fixed amount

• Interest is calculated annually

Which component of the future value formula is assumed to be zero and entered as a negative number?

• Interest rate

• Number of payments

• Present value

• Payment type

In the future value formula, what does the 'type' parameter indicate?

• The interest rate

• The principal amount

• The frequency of compounding

• The timing of payments

What happens to the future value if the interest rate is increased from 15% to 16%?

• The future value decreases

• The future value remains the same

• The future value becomes zero

• The future value increases

How does the future value function help investors?

• By determining tax liabilities

• By calculating the future value of investments

• By predicting stock market trends

• By assessing credit scores