Adjusting for inflation on Excel

[SugarHoneyIceTea]

So I have an excel problem (first time user) and I have to adjust for inflation for a fortnightly payment.

So the payment comes in every fortnight and its $900.

Inflation is estimated approx. 4% and its to occur on a yearly basis on and after 1/07/2014 (so the next one would be 1/07/2015 and then 1/07/2016 etc etc).

How do I get it to automatically adjust on a yearly basis?

Is there some sort of recurring formula I can use?

Thank you in advance <3

 

[SugarHoneyIceTea]

bump

 

[marcothy]

You would likely have to handle this through VBA or several set of functions. The trouble is, it seems like a lot of work for what is a 1 time adjustment - plus, inflation is not fixed either. Although the request is simple, getting it to handle and adjust is where things get complicated.

 

[gracehill]

I got a sample for you. Suppose your monthly expense is 5000 (any currency or in any country) and the inflation rate is 7%, you required to know what will be the monthly expense after 15 years instead of present 5000? It can be done by using below formula. MS Excel is the best for this kind of calculations:

=Present expense amount * (1+inflation%)^number of years

Example to the above given scenario with 7% inflation and after 15 years (this can be changed as per your convenience. However try to add maximum inflation to get the amount that later cannot come as insufficient due to the errors in the calculation of inflation rate. I prefer adding an inflation rate between 10 to 14:

=5000*(1+7%)^15 = 13795 /-

5000 = Your present monthly expense
7% = Expected inflation inflation rate
15 = Number of years
13795 = is the amount you required per month after 15 years instead of present 5,000, with an inflation rate of 7%. If the inflation rate is more, the amount also increased accordingly.

The same formula you can use to identify the maturity value of your investment after a period of time. In this case, the 7% will be considered as the interest rate of your investments.