|PVEGAnnM (DisAER, TermYrs, PmtsPerYear, AnnGrowthRate, [GrowRevsPerYrOpt])|
|Present Value of an Exponentially Growing Annuity|
|This function uses standard annuity formulae to evaluate the Present Value of an Exponentially Growing Annuity where the growth is applied annually, initially at the end of the first year. The difference between this function ant PVEGAnn is that you can|
The parameter GrowRevsPerYrOpt is the same units as PmtsPerYear, meaning that it can be arrears or in advance. Bear in mind, however, that if you specify a positive number, i.e. growth in advance, the very first value in the calculation will be assumed escalated by the growth rate based on the length of that period. GrowRevsPerYrOpt should usually be -ve.
With any annuity formula involving GROWTH, the key confusion is WHEN the growth commences. The answer is - at the end of year 1. But that does NOT mean the YEAR 1 payment is grown/inflated! In fact it means that growth starts at year 1, and therefore the first grown payment is at YEAR 2. So the payments are: Time 0 - 0, Time 1 - 1, Time 2 - (1+g), Time 3 - (1+g)^2, etc.