What is the formula for compounding interest with annual additions

Would appreciate help with learning the formula for how to compound interest
with annual additions. I would like to know the future value of an interest
bearing account starting with a certain principle and adding annual additions
such as one does with a 401K. I know the formula for future value without
additions but not the one including annual additions.

The FV() function (future value) will return the future value of a stream of
EQUAL payments and has an optional argument for present value. If you are
going to assume payments of varying amounts, then your best bet is to create
a table with contribution dates and amounts, and apply a compounding formula
to each contribution based on the # of annual periods from the date of
contribution to the "maturity" date. The compounding formula is simply

Contribution amount * (1+int rate)^ (# periods)

So, if A1 contains the contribution amount, and the interest rate is 7.5%,
invested for 15 years, the formula would be

=A1*(1+.075)^15

Compound each of your contributions, then sum all the compounded values.



"charrismd" wrote:

Would appreciate help with learning the formula for how to compound interest
with annual additions. I would like to know the future value of an interest
bearing account starting with a certain principle and adding annual additions
such as one does with a 401K. I know the formula for future value without
additions but not the one including annual additions.