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Thread: How to find present value of geometric increasing annuity

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    How to find present value of geometric increasing annuity

    I know the formula is P((1+r)^n-(1+g)^n)/(r-g). But what happens when n goes to infinity? Do they cancel out and become just P/(r-g)? Thanks.

  2. #2
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    Quote Originally Posted by sophia View Post
    I know the formula is P((1+r)^n-(1+g)^n)/(r-g). But what happens when n goes to infinity? Do they cancel out and become just P/(r-g)? Thanks.
    Write out the stream of payments, use geometric sums, what do you think it goes to?

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