This Formula Calculator calculates the present value of series of payment that increase at a constant rate with the first payment at the beginning of period 0.
Formula: pv((1 + fcRate / 100) / (1 + fcGrowth / 100) - 1, fcnper, fcpmt, 0, 1)
PV / fcPv : The present value.
N / fcNper : The number of periods.
i% / fcRate : The periodic rate.
PMT / fcPmt : The base periodic payment at the beginning of period zero. This payment increases by g% each period.
g% / fcGrowth : The periodic growth rate of the payment.
"You are considering the purchase of an investment that will pay $1,000 immediately, and then 4 additional payments that grow at a rate of 3% per year to account for expected inflation. If your required return is 8% per year, what is the value of this investment?"
(Graduated Annuities Using Excel - TVMCalcs.com)
Value | Keystrokes | Display | Description |
---|---|---|---|
5 | N | 5.00 | Stores the N value. |
8 | i% | 8.00 | Stores the i% value. |
1000 | PMT | 1,000.00 | Stores the PMT value. |
3 | g% | 3.00 | Stores the g% value. |
PV | -4,557.98 | Calculates the present value. |
If you are able to purchase the investment for $4,500, what would your return be?
Value | Keystrokes | Display | Description |
---|---|---|---|
-4500 | PV | -4,500.00 | Stores the PV value. |
i% | 8.73 | Calculates the periodic rate. |
Graduated Annuities Using Excel - TVMCalcs.com
Graduated Annuities on the HP 12C -TVMCalcs.com