Question

Jim makes a deposit of $12,000 in a bank account. In Excel, what function would you use to calculate the future value of the deposit?

A) PV function
B) FV function
C) PMT function
D) RATE function

Answer 1

To calculate the future value of a deposit in Excel, you would use the B) FV function. The FV function is used to calculate the future value of an investment based on cash flows and an interest rate. It requires the interest rate, number of periods, payment, present value, and type as inputs.

Step-by-step explanation:

To calculate the future value of a deposit in Excel, you would use the B) FV function. The FV function stands for Future Value and is used to calculate the future value of an investment based on a series of cash flows and an interest rate. In this case, the cash flow is the deposit amount of $12,000 and the interest rate would need to be specified as well.

For example, the formula would look like:

=FV(interest rate, number of periods, payment, [present value], [type])

Where:

• Interest rate is the rate at which the investment grows
• Number of periods is the number of time periods the investment will grow (assuming compounding)
• Payment is the amount deposited or withdrawn per period (if applicable)
• Present value is the starting amount (optional in this case)
• Type is an optional argument that specifies whether payments are made at the beginning or end of the period