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Email Newsletter Challenge 22

This week’s challenge will test your ability to use Excel or Google Sheets to answer a “simple” question.

Think you’re up to the task? Download the spreadsheet challenge using the links below.

Challenge

This week, your task is to calculate an answer for the following question. If the cost of living increases by 3.5% every year, what will your cost of living be 8 years from now?

Solution 1

There are two main approaches you can use to solve this question. (There may be more than two, but I believe that these are the two most common.)

For the first solution, select cell E4, and enter the following formula.

=FV(0.035, 8, 0, -C5)

The FV function enables you to calculate the future value of an investment or amount of money (in this case, the cost of living). Since the question asks us to calculate the cost of living 8 years from now with a yearly increase of 3.5%, these are the following variables you have to work with for the FV function.

Arg1 – Rate – 0.035
Arg2 – Number of Periods – 8
Arg3 – Payments – None in this case
Arg4 – Current Value – Stored in cell C5

You just place this information within the FV function (and be sure to add a negative before the C5 reference due to how the function works), and you get your final answer.

Solution 2

For the second solution, first make a list to represent the next 8 years.

Then in cell C6, enter the following formula.

=C5*1.035

This formula calculates the cost of living for the next year considering an increase of 3.5%. You then copy this formula down using the fill handle.

After that, you can reference the value in cell C13 to get your final answer.

And that concludes your solutions for your weekly spreadsheet challenge. If you still have questions, please leave me a comment below so I can clarify things for you. I’m here to help! 😊

I hope you had fun, felt challenged and learned something new. And if you’re not signed up for my weekly email newsletter, you can sign up right here!

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