 Quote:
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Originally Posted by Have Funds, Will Retire
If you're using monthly numbers, you'd have to divide the 3% by 12, and multiply the years (10) by 12...
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Quote:
4000*(1+3%/12)^10*12 or 4000*(1+.0025)^120 = 5397.414189
In Excel: =FV(3%/12,10*12,0,-4000)
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Not to be a stickler for interest theory  .... but to go from a yearly rate to a monthly rate, you can't just divide by 12, just like you can't multiply by 12 to go the other way. You have to take "1 + yr" to the power of "1/12", and then minus 1. So for 3%:
monthly rate = (1+.03)^(1/12) - 1 = .2466%
Though the rates are almost equaly, especially if you round to two decimal places. And the difference in the above example is only $21.75.
- Alec
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