What is the formula to calculate the present value of a growing annuity with perpetuity and discount rate?

Economics Time Value Of Money Questions



80 Short 71 Medium 54 Long Answer Questions Question Index

What is the formula to calculate the present value of a growing annuity with perpetuity and discount rate?

The formula to calculate the present value of a growing annuity with perpetuity and discount rate is:

PV = C / (r - g)

Where:
PV = Present value
C = Cash flow in the first period
r = Discount rate
g = Growth rate of the annuity