(71B) Present Value of a Growing Annuity

01032021, 03:44 PM
Post: #1




(71B) Present Value of a Growing Annuity
Introduction
Today we are going to calculate the present value of a growing annuity. Unlike most annuities where the payment is constant, in a growing annuity, the payment increases each period. For this particular blog, we are working with annuities that payments increase by a growth percent (g%) each period. The annuity has an different interest rate (r%) in which payments are discounted. Variables: P = base payment (the first payment) g = growth rate per period r = interest rate per period n = number of periods PV = present value Present Value of a Growing Annuity  Ordinary PV = P/(1+r) * (1  w^n)/(1  w) Present Value of a Growing Annuity  Due PV = P * (1  w^(n+1))/(1  w) HP 71B Program: PVGROW Note: This is for both ordinary and growing annuities due. Code: 100 DESTROY P,G,R,W,A,C Example: Base Payment: P = 20.00 Interest Rate: r = 4% Growth Rate: g = 5% n = 5 Ordinary Growing Annuity Result: PV = 98.02 Growing Annuity Due Result: PV = 122.92 Source: "Present Value of a Growing Annuity" financeformulas.net https://financeformulas.net/Present_Valu...nuity.html Retrieved December 13, 2020. More information: http://edspi31415.blogspot.com/2021/01/s...esent.html 

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(71B) Present Value of a Growing Annuity  Eddie W. Shore  01032021 03:44 PM

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