FINANCIAL CALCULATORS
Perpetuity Calculator
Calculate the present value of a perpetuity paying a fixed amount indefinitely.
What is the Perpetuity Calculator & How does it work?
A perpetuity is an annuity that pays out an infinite stream of cash flows. The present value of a perpetuity can be calculated using the formula:This formula assumes that the cash flows are received indefinitely and that the discount rate remains constant over time.
PV = frac{C}{r}
PV = Present Value
C = Cash flow per period
r = Discount rate
C = Cash flow per period
r = Discount rate
Parameters
Present Value—
Frequently Asked Questions
What is a perpetuity?
A perpetuity is an annuity that pays out an infinite stream of cash flows.
How do you calculate the present value of a perpetuity?
Use the formula PV = C / r, where PV is the present value, C is the cash flow per period, and r is the discount rate.
Can I use this calculator for any type of investment?
This calculator is specifically designed for perpetuities, which are a type of investment that pays out an infinite stream of cash flows.
What happens if the discount rate changes over time?
The formula assumes a constant discount rate. If it changes, the calculation would need to be adjusted accordingly.
Is there a limit to how much the cash flow can be?
There is no specific limit to the cash flow amount in this calculator.
Can I use this calculator for personal financial planning?
Yes, you can use it to understand the present value of perpetuities in your financial planning.
What is the difference between a perpetuity and a finite annuity?
A perpetuity pays out an infinite stream of cash flows, while a finite annuity has a specific end date for payments.
Results are for informational purposes only and do not constitute professional advice.