Calculate
Future Value - Regular Deposits
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In
this
article we’re going to develop a script to see how to calculate the future
value that regular deposits may produce. This code
calculates the amount
required as a regular deposit to provide a stated future value in a
specified
time period. All deposits are equal.
It’s necessary for you to supply
the
future value, the nominal interest rate, the number of deposits per
year and
the number of years. |
The
calculation for regular deposits is based on the following formula:
where:
R = amount of regular deposit
T = future value
i = nominal interest rate
N = number of deposits per year
Y = number of years
This is
our simple Matlab function or script to calculate the above formula:
function r =
calc_future_value(t,
it, n, y)
it =
it/(n*100);
r =
t*it/((1+it)^(n*y)-1);
We can create another
script to test and run the above
m-file:
clc;
clear; format bank
t =
input('Enter
total value after Y years: ');
it =
input('Enter
nominal interest rate: ');
n =
input('Enter
number of deposits per year: ');
y =
input('Enter
number of years: ');
regular_deposits
= calc_future_value(t, it, n, y)
Example:
Jackie
would like to have $1000 at the end of one year in a savings account.
How much
must she deposit each month at 8% interest to achieve it?
We run
our test code and get:
Enter
total value after Y years: 1000
Enter
nominal interest rate: 8
Enter
number of deposits per year: 12
Enter
number of years: 1
The
result is:
regular_deposits
= 80.32
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'Calculate Future
Value' to home
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'Calculate Future Value' to 'Finance Formulas'
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