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Growing Annuity Calculator.

Calculate present value for a finite growing annuity.

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Present value: $7,983.00

Present value

$0.00

FAQs

How does the growing annuity calculator work?

Enter the requested values to see a deterministic result. Assumptions are explicit and no live market or tax data is fetched.

Use Cases

Valuing a growing income stream

Determine the current worth of a finite series of payments that increase at a steady rate, such as a business contract or a growing annuity from an investment.

Example: A 5-year lease with annual payments starting at $10,000 and growing 3% per year, discounted at 8%.

Financial planning for future expenses

Estimate the lump sum needed today to fund a series of growing future expenses, like college costs or maintenance reserves, over a known period.

Example: Funding 4 years of tuition that starts at $20,000 and grows 5% annually, with an investment return of 6%.

Frequently Asked Questions

What is a growing annuity?
A growing annuity is a series of cash flows that grow at a constant rate each period for a fixed number of periods. This calculator finds the present value of such a series, discounting each payment back to today.
How is the present value of a growing annuity calculated?
The calculator uses the formula PV = P / (r - g) * (1 - ((1 + g) / (1 + r))^n), where P is the first payment, r is the discount rate, g is the growth rate, and n is the number of periods. It accounts for the growth and time value of money.
Can I use this for growing dividends or rent?
Yes, this calculator is suitable for any finite series of growing cash flows, such as growing dividend payments, escalating lease payments, or increasing maintenance costs, as long as the growth rate is constant.

Tips & Common Mistakes

Tips

  • Ensure the growth rate and discount rate are in the same format (e.g., both as decimals or both as percentages) to avoid calculation errors.
  • The number of periods should match the frequency of payments. If payments are annual, use years; if monthly, use months.
  • If the growth rate equals the discount rate, the formula simplifies to PV = P * n / (1 + r). Some calculators may handle this automatically, but check your inputs.
  • Use this calculator for finite annuities only. For perpetual growing payments, use a growing perpetuity formula instead.

Common Mistakes to Avoid

  • Using the growth rate as a percentage instead of a decimal (e.g., 5 instead of 0.05) when the discount rate is a decimal, leading to incorrect results.
  • Forgetting to adjust the number of periods to match the payment frequency, such as using years when payments are monthly.
  • Assuming the first payment occurs immediately (annuity due) instead of at the end of the first period (ordinary annuity), which changes the present value.

Last updated: August 13, 2026