A perpetuity values an indefinite stream of payments under a constant discount rate.
Perpetuity Calculator
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Table of Contents
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What is Perpetuity Calculator?
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How to Use This Calculator
- Enter or select Dividend, Discount rate, Growth rate.
- Check the unit beside each measurement. For a percentage or rate, use the scale and time period stated in the form.
- Choose Calculate, then compare the output with the formula and example below. If you change a value or option, calculate again to update the result.
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Formula Used
Level perpetuity: PV=C/r; growing perpetuity: PV=C₁/(r−g)
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Variables Explained
| Input | What it means |
|---|---|
| Dividend | An investment-income payment; the perpetuity formula uses the next expected payment. |
| Discount rate | The stated rate or percentage, entered using the scale and time period shown in the form. |
| Growth rate | The stated rate or percentage, entered using the scale and time period shown in the form. |
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Worked Example
A next-period payment of 100 with r=8% and g=3% is worth 2,000.
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Why Use This Calculator?
Compare the result with the underlying statement, budget or proposed transaction. It is most useful when every amount uses the same reporting period and the same accounting definition.
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Common Mistakes
- The discount rate must exceed the growth rate for the standard growing-perpetuity value to be finite.
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Frequently Asked Questions
Should I use monthly or annual figures?
Use one consistent period for every amount and rate in the relationship. If a form specifies an annual rate or a monthly amount, follow that label rather than mixing time periods.
Does the result include fees and tax?
Only the costs and taxes represented by the inputs and formula are included. A real transaction can include other charges, so compare the estimate with the underlying agreement or statement.
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Sources & References
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