Payment from FV
Calculates the periodic payment needed to reach a future value goal.
When to use: Use to find how much to save annually to reach a target amount.
Formula
Variables
| Symbol | Name | Description | Unit |
|---|---|---|---|
| PMT | Payment | Periodic payment amount | $ |
| FV | Future Value | Future lump sum value | $ |
| k | Interest Rate | Nominal annual interest rate as a decimal | % |
| n | Number of Years | Time period in years | years |
Real-Life Examples
Example 1: Retirement Goal
You want $1,000,000 in 30 years at 8% annual return. How much should you save per year?
Given
Step-by-Step
Save $8,827.43 per year to become a millionaire in 30 years at 8%.
Example 2: Down Payment Savings
Save for a $60,000 down payment in 5 years at 4% annual return.
Given
Step-by-Step
Save $11,076.89 annually to reach $60,000 in 5 years.
Frequently Asked Questions
Enter your target amount as FV, the expected annual return as k, and the number of years as n. The formula gives the fixed annual savings needed to reach your goal, assuming contributions are made at the end of each year.
A sinking fund is a savings plan where regular deposits are made to accumulate a specific future amount. Companies use sinking funds to save for bond repayment, equipment replacement, or other known future obligations.
A higher interest rate means your money grows faster, so you need to save less each period. For example, reaching $1 million in 30 years at 8% requires saving roughly $8,800/year, but at 4% it requires about $17,800/year — more than double.