Perpetuity Calculator

Calculate the present value of perpetual cash flows and analyze investment valuations with comprehensive financial insights and growth scenarios.

✓ Present Value ✓ Growth Perpetuity ✓ Investment Analysis

Perpetuity Calculator

Perpetuity Type

Cash Flow Details

Fixed annual payment amount

Required rate of return

Investment Analysis

Tax rate on income

Perpetuity Formulas

Present value of perpetual cash flows

Formulas:

Simple: PV = C / r
Growing: PV = C / (r - g)
Where C = cash flow, r = discount rate, g = growth rate

Investment Examples

Perpetual Bond
$100 annual coupon, 5% rate
Growing Dividend
$50 dividend, 3% growth
Preferred Stock
$75 annual dividend

Perpetuity Types

Simple: Fixed payment forever
Growing: Payment increases annually
Delayed: Payments start in future
Variable: Changing growth rates

Applications

💰 Bonds: Perpetual government bonds
📈 Stocks: Dividend valuation models
🏠 Real Estate: Rental income streams
💼 Business: Company valuation
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Understanding Perpetuities

A perpetuity is a financial instrument that pays a fixed amount of money at regular intervals forever. It's used to value investments with indefinite cash flows.

  • Present Value: Current worth of infinite payments
  • Discount Rate: Required rate of return
  • Growth Rate: Annual increase in payments
  • Risk Assessment: Impact on valuation

Investment Applications

Bond Valuation

Value perpetual bonds and consols with fixed coupon payments.

Dividend Stocks

Estimate stock values using dividend discount models.

Real Estate

Value properties based on perpetual rental income streams.

Business Valuation

Estimate company values using terminal value calculations.