Future Value Functions in Excel

In this video, Ralph explains the future value function in Excel, focusing on how to calculate future value with an initial account value, rate of return, and monthly investments. He demonstrates setting up parameters, using optional parameters, and analyzing the impact of different investment scenarios. Ralph also discusses historical returns and the significance of initial account value, concluding with insights on investing at the beginning versus the end of the month.

What is the main topic discussed in the video?

• Present value function in Excel

• Future value function in Excel

• Interest rate calculation

• Excel chart creation

What does the initial account value represent in the future value function?

• The final amount after investment

• The starting amount in the account

• The interest rate applied

• The total number of periods

Which parameter is NOT set up for the future value calculation?

• Annual salary

• Rate of return

• Initial account value

• Monthly investment

What is the first parameter in the future value function?

• Initial account value

• Monthly investment

• Rate of return

• Number of periods

How is the monthly rate of return calculated?

• By subtracting 12 from the annual rate

• By adding 12 to the annual rate

• By dividing the annual rate by 12

• By multiplying the annual rate by 12

What does the 'pmt' argument represent in the future value function?

• The initial account value

• A positive cash inflow

• The total future value

• A negative cash outflow

What is the default type value in the future value function?

• 0, investing at the end of the period

• 3, no specific investment time

• 1, investing at the beginning of the period

• 2, investing in the middle of the period

What is the future value after 25 years with a monthly investment of $350 and an 11% annual return?

• $750,000

• $450,000

• $650,000

• $550,000

How is the total investment calculated?

• Monthly investment times number of years divided by 12

• Monthly investment times number of months

• Monthly investment times number of years

• Monthly investment times number of years times 12

What was the average return for the S&P 500 over the last 51 years?

• 10.5%

• 11.12%

• 12.5%

• 9.8%