Future Value Growing Annuity Formula

Future Value Growing Annuity Formula

Growing Annuity or future value of growing annuity can be calculated with following formula. It is important to note that for growing annuity future as well as present value may be calculated. In this article we have explained future value of Growing annuity.

Future Value Growing Annuity Concept 

Growing annuity concept is very similar to the regular annuity due concept, however in case of growing annuity the amount of payment (contribution) in an investment plan is increasing with a constant rate. Growing annuity concept has been explained with an example

i= interest Rate

g=Growth rate

n= period

C=Deposited amount

Future Value Growing Annuity Formula Example

Deposited Amount = 5,000

Annual Growth in Deposit   = 4%

Interest Rate = 10%

Period =5 Years

Solution

Annuity Factor =10,000x [(1+10%)⁵-(1+4%)⁵]

                                            10%-4%

=5000 x [1.610 – 1.2166]/.1-.05

=5000 x 7.868

=39340

 Growing Annuity