An annuity is a term that is mainly associated with retirement. By following some simple steps in Excel, one can easily calculate a growing annuity for one’s retirement plan. You will need some specific information regarding the methods and just find out the expected growing annuity in no time. In this article, we will show you how to calculate growing annuity in Excel.

## Growing Annuity

Before beginning our procedure, we will try to understand what an annuity and a growing annuity are. In simple words, an annuity is a predetermined amount of money that you will start receiving either annually or monthly after a fixed amount of time. On the other hand, a growing annuity is a series of payments or revenues that rise consistently over a predetermined number of cycles, increasing in each period by a fixed percentage.

## How to Calculate Growing Annuity in Excel: 2 Handy Ways

We will show you how to calculate both the present value of the growing annuity and the future value of the growing annuity. In this article, we will use two different methods to do so. In our first procedure, we will use ** the NPV function** of Excel to calculate the present value of the growing annuity, and in our second method, we will apply

**to determine the future value of the growing annuity. For our working purposes, we will use the following data set.**

*the FV function*From the data set, you can see that to calculate the growing annuity, we have the initial investment, interest rate, growth rate, and the number of years. From this information, we will determine the growing annuity.

### 1. Using NPV Function to Calculate Present Value of Growing Annuity in Excel

In our first procedure, we will calculate the present value of a growing annuity. To do that, we will use ** the NPV function**. See the below-given steps for a better understanding.

**Step 1:**

- Firstly, we will determine the stream of payments for calculating the growing annuity.
- As our initial investment is
we have to calculate the growing payment from the second year.*$8,000* - To do that, type the following formula into cell
.*C7*

`=C6*(1+$F$6)`

**Step 2:**

- Secondly, press
and get the growing payment for the second year which is*Enter*.*$8,440* - Then, use the
feature to drag the formula for the lower cells of that specific column.*AutoFill*

**Step 3:**

- Thirdly, we will calculate the present value for the growing annuity by applying the following formula of
.*the NPV function*

`=NPV(F5,C6:C15)`

**Step 4:**

- Finally, hit the
button to get the required growing annuity which is*Enter*.*$63,648.30*

**Read More: **How to Calculate Equivalent Annual Annuity in Excel

### 2. Applying FV Function to Determine Future Value of Growing Annuity

We will apply **the FV function** in our second procedure to calculate the future value of the growing annuity. Go through the following steps to do so.

**Step 1:**

- Firstly, take the following data set for calculation.
- Here, we have added an extra data input (Payment in cell G8) cell to calculate the growing annuity.

**Step 2:**

- Apply the following formula in the cell
**C7**to calculate the payment value for the second year.

- Use the
**Fill Handle**tool to copy the formula in the remaining cells to calculate the future stream of payments.

- Like the previous method, calculate the present value of the growing annuity using the following formula in cell
**G10**.

`=NPV(G5,C6:C15)`

**Step 3:**

- Thirdly, apply the following formula in cell
**D6**to determine the future value of the first payment.

`=FV($G$5,($G$7-B6),-C6)`

- Then, drag down the
**Fill Handle**icon to calculate future values for the remaining payments.

- Finally, write the following formula with
**the FV function**in cell**G11**.

`=SUM(D5:D15)`

- Press
**Enter**and you will get the desired future value of the growing annuity.

**Read More:Â **How to Calculate Deferred Annuity in Excel

**Download Practice Workbook**

You can download the free **Excel** workbook here and practice on your own.

## Conclusion

Thatâ€™s the end of this article. I hope you find this article helpful. After reading the above description, you will be able to calculate the growing annuity in** Excel** by using any of the above-described methods. Please share any further queries or recommendations with us in the comments section below.

**Related Articles**

- How to Calculate Annuity Payments in Excel
- How to Calculate Annuity Factor in Excel
- How to Do Ordinary Annuity in Excel
- How to Calculate Annuity Due in Excel

**<< Go Back to Excel Annuity Formula | Excel Formulas for Finance | Excel for Finance | Learn Excel**

The FV growing annuity formula is not correct. You didn’t include the 5.5% growth rate in your calculation. What you provided is the FV formula for a regular annuity, not a growing annuity.

The PV equation is correct, though.

Dear

VICTORI,Thanks for your feedback. It seems that you have mistakenly assumed that we didnâ€™t include the

5.50%growth rate in our calculations.The growth rate is used for calculating the stream of future payments. As we showed this calculation in method 1 (i.e. Using the

NPV Functionmethod), we didnâ€™t show it again in method 2 and suggested users to see it from the previous method.However, as it has dodged your eyes, we have included the detailed calculation in method 2 as well. You also suggested that the

FV formulawe provided, is for a regular annuity, not a growing annuity. This is true, and we have updated our article according to your feedback. You can check the updated article and share your feedback with us.Thank you again for your valuable comment.

Regards,

Seemanto SahaTeam ExcelDemy