The procedure will be explained with a hypothetical example. It can serve as an interim method for those who can't find a model specifically designed for evaluating composite real-value annuities. The example calculation results are reported with full decimals to enable replication and verification, although the implied precision is spurious due to assumptions about uncertain future inflation rates and investment returns. The calculation is followed by a theoretical explanation. Investments and returns can be expressed as stocks and flows.
Stocks are equivalent to lump sum payments, and flows are equivalent to annuities.
Annuities can be either a constant real amount or a constant nominal amount. The Value Wizard Investment Models are designed for exponential cashflow growth patterns. They are not designed for non-exponential increases in cashflow in discrete steps such as sequential annuities. Also, they are not designed for a growth pattern beginning with an initial period of annual cashflows equal to zero. Yet a stream of constant real values is equivalent to a stream of non-constant exponentially growing nominal values.