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Growing Annuity

4 formulas

Growing annuity formulas handle payment streams that increase at a constant percentage each period. These are essential for modeling salary growth, inflation-adjusted cash flows, and any financial scenario where payments escalate over time rather than remaining fixed.

Ordinary Growing Annuity

Present Value of a Growing Annuity

Present value of a finite series of payments that grow at a constant rate g per period.

PVA = \frac{PMT}{k - g} \times \left[1 - \left(\frac{1 + g}{1 + k}\right)^n\right]

Showing present value, annual

2 compounding methods

Future Value of a Growing Annuity

Future value of a finite series of payments that grow at a constant rate.

FVA = \frac{PMT}{k - g} \times \left[(1 + k)^n - (1 + g)^n\right]

Showing future value, annual

2 compounding methods

Growing Annuity Due

Present Value of a Growing Annuity Due

Present value of a growing annuity with payments at the beginning of each period.

PVA = \frac{PMT}{k - g} \times \left[1 - \left(\frac{1 + g}{1 + k}\right)^n\right] \times (1 + k)

Showing present value, annual

2 compounding methods

Future Value of a Growing Annuity Due

Future value of growing beginning-of-period payments.

FVA = \frac{PMT}{k - g} \times \left[(1 + k)^n - (1 + g)^n\right] \times (1 + k)

Showing future value, annual

2 compounding methods