Present value of an annuity that grows at rate g for n years |

**Around the formula...**

We assume that F_{0} x (1+g) is the
first year cash flow and grows at rate g over n years.

Then we have :

or :

assuming that k > g

Thus, a security that pays out 0.8 the first year, growing by 10% for the four following years has, at a discounting rate of 20%, a present value of :

PV = (0,8/0,1) ยด (1 - (1,10/1,20)^{5}) =
2,82