For computation of the present value of growing annuity with n periods, the cash flow for the current period is used and not the cash flow to be received in the next period.

Question

Quizplus · Accepted Answer

In the computation of the present value of a growing annuity, the cash flow used is the one expected to be received in the next period, not the current period, because the growth rate is applied to calculate future cash flows.

For Computation of the Present Value of Growing Annuity with N