Given that year 1 cash flow is $1000. Suppose you are expected to receive cash flows that are growing at a constant rate of 4% starting from year 1 up to 4 years. What is the present value of these growing annuities if the required rate of return is 8%? Year FV PV 1 1,000 -$925.93 2 1000 x 1.04 = 1,040 -891.63 3 1040 x 1.04 = 1,081.60 -858.61 4 1,081.60 x 1.04 = 1,124.64 -826.81 The correct answer is in the above last column. But how do I calculate PV? I tried using this formula but could not get the PV for each of the year: PV = FV/(1 + r)-t

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Given that year 1 cash flow is $1000

Finance Nov 24, 2020

Given that year 1 cash flow is $1000. Suppose you are expected to receive cash flows that are growing at a constant rate of 4% starting from year 1 up to 4 years. What is the present value of these growing annuities if the required rate of return is 8%?

Year	FV	PV
1	1,000	-$925.93
2	1000 x 1.04 = 1,040	-891.63
3	1040 x 1.04 = 1,081.60	-858.61
4	1,081.60 x 1.04 = 1,124.64	-826.81

The correct answer is in the above last column. But how do I calculate PV?

I tried using this formula but could not get the PV for each of the year: PV = FV/(1 + r)^-t

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