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Chapter 18. Building Investment Formulas > Calculating the Future Value with Va...

Calculating the Future Value with Varying Interest Rates

The future value examples that you've worked with so far have all assumed that the interest rate remained constant over the term of the investment. This will always be true for fixed-rate investments, but for other investments, such as mutual funds, stocks, and bonds, using a fixed rate of interest is, at best, a guess about what the average rate will be over the term.

For investments that offer a variable rate over the term, or when the rate fluctuates over the term, Excel's Analysis ToolPak offers the FVSCHEDULE() function, which returns the future value of some initial amount, given a schedule of interest rates:


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