Perpetuity Calculator

Calculate present value of perpetuity payments.

Annual Payment ($)

Discount Rate (%)

Growth Rate (%)

Leave blank for ordinary perpetuity

Perpetuity Calculation Results

Present Value

Annual Payment

Discount Rate

Growth Rate

Perpetuity Type

Ordinary Perpetuity: Fixed payment of annually forever.

Growing Perpetuity: Payment starts at and grows at annually.

Future Payment Examples

Perpetuity Formulas

Ordinary Perpetuity

PV = PMT ÷ r

• PV = Present Value
• PMT = Annual Payment
• r = Discount Rate (as decimal)

Growing Perpetuity

PV = PMT ÷ (r - g)

• PV = Present Value
• PMT = First Year Payment
• r = Discount Rate (as decimal)
• g = Growth Rate (as decimal)

Note: Growth rate must be less than discount rate

Key Concepts

What is a Perpetuity?

• Stream of equal payments forever
• Common in preferred stocks
• Used in real estate valuations
• Foundation for many financial models

Applications

• Valuing preferred shares
• Real estate income properties
• Pension valuations
• Terminal value calculations

Important Considerations

• Assumes payments continue forever
• Discount rate must be positive
• Growth rate must be less than discount rate
• Theoretical concept (infinite time)

Related Tools

• Present Value Calculator
• Annuity Calculator
• Stock Valuation Calculator
• Bond Calculator

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