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I myself am not particularly indulged with the very idea of memorizing anything. Everyone must remember that a growing perpetuity formula though. It is likely to be useful and you may also remember an annuity formula. The formula that is used are in reference to many context. The formula that is put up as the of growing annuity. You need to know that this might not be important for others, but it will be important for you.

The formula is,

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This formula is used with the existing context to the pension direct cash flow that tends to increase in stature of a total fixed number that is of the time periods and eventually stop. This is not necessary however. This is often the flexible and convenient form to work with cash flows of themselves in a spreadsheet.

The figure that is represented in 3.1 gives a portrayal of the summary of the cash flow. There is a top most certainty that one displays the pattern of the cash flows. As for the cash flow annuity, they will stop after a while. The graph on the bottom portion represents all such present values for such cash flows. The bars are thus naturally shorter than the ones of the cash flows and that further denotes the time value that is of the money. These graphs will hence be of the given formulas.

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Summary

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Key terms

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Solve now! Solutions

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Problems

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