Abstract
This paper lays out a comprehensive, systemic, and conceptual framework for applying a financial calculator to handle graduated (growing) annuities, a practically important topic that has not received its due attention in finance textbooks. It introduces an alternative to the conventional approach in transforming the growth rate and the interest rate into a single rate as I in the calculator. It then shows that both approaches give the same answer and demonstrates how they can be used interchangeably with the illustration of several numerical examples. In short, this article provides a thorough rationale and gives a clear presentation for the mechanism that finance practitioners and students can follow when dealing with graduated annuities with the usage of a financial calculator, a more user friendly and functionally viable option than the employment of an abstract, complex formula. The financial calculator application also circumvents the situation where spreadsheets are not readily available, or their usage is restricted in an exam setting.
Recommended Citation
Chen, Su-Jane
(2025)
"Utilizing the Financial Calculator for Graduated Annuities: Compound Rate, Discount Rate, Present Value, and Future Value,"
Southwestern Business Administration Journal: Vol. 22:
Iss.
2, Article 1.
Available at:
https://digitalscholarship.tsu.edu/sbaj/vol22/iss2/1