7 Present Values with Growth

Learn how to calculate the present values of annuities and perpetuities with constant growth. This video explains how to handle cash flows that increase at a steady rate while still applying a constant discount rate. We demonstrate the manual method of discounting individual cash flows and then show how to derive and apply generalized formulas for both annuities and perpetuities with growth. Understand the key assumption that the discount rate must be greater than the growth rate for the perpetuity formula to converge. Subscribe to @AxiomTutoringCourses for more financial tutorials.