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Growing Annuity-Payment (PV)

Last modified by
on
Jul 24, 2020, 6:28:07 PM
Created by
on
Jul 11, 2014, 10:22:24 AM
P=PV⋅r-g1-(1+g1+r)n
Present Value(PV)
Rate per Period (r)
Growth rate(g)
Number of Periods(n)
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Finance
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3fd5fa8c-08e5-11e4-b7aa-bc764e2038f2

The growing annuity payment, when the present value is known, is used to determine the initial payment of a series of periodic payments that grow at a proportionate rate.

  • PV = Present Value
  • r = rate per period
  • g = growth rate
  • n= number of periods

EXAMPLE

Joe makes an initial payment of $100 and the payments are expected to grow each period at 10%. Therefore, the second payment would be $110 ($100 x [1 + g]), and the third payment would be $121 ($110 x [1 + g]).
This equation, Growing Annuity-Payment (PV), is used in 1 page
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