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Rate is the rate used to compound each period.

For a percentage increase see our increasing payment calculator. An initial payment of $100 will be $200 in period 2, $300 in period 3, and so on. It is also the amount that the payment increases each period.

Initial Gradient Payment is the initial payment that is made.

Present Value = Initial Gradient Payment x ((1 + rate) periods – (rate x periods) – 1) ÷ (rate 2 x (1 + rate) periods)įuture Value = Initial Payment x ((1 + rate) periods – (rate x periods) – 1) ÷ rate 2Įquivalent Equal Payment = Initial Payment x ((1 ÷ rate) – (periods ÷ ((1 + rate) periods – 1

Formula – How the Present and Future Values of a Gradient Payment are Calculated The future value is the value of at the end of all time periods. The present value is the value in today’s dollars of the increased payment.

In time period 2 it is $200, time period 3 it is $300, time period 4 it is $400. Definition – What is a Gradient (Linear) Payment?Ī gradient payment (also known as linear payment growth) is a payment that increases by a regular amount.Īs an example, in the first time period, the payment is $100.