Perpetuity value: Valuing a Level Payment That Continues Forever
A perpetuity assigns present value to equal payments assumed to continue indefinitely. It is a useful building block for valuation models, even though actual contracts need close inspection.
Use the Perpetuity value Calculator to enter your own figures and compare the result with the worked example below.
Perpetuity value formula
PV = Cash flow ÷ r
Worked example
| Item | Example value |
|---|---|
| Cash flow per period | 100 USD |
| Discount rate per period | 5 % |
| Perpetuity value | 2,000 USD |
These are illustrative inputs, not current prices, rates or recommended targets. Where a currency is shown, keep all comparable money amounts in the same currency; conversion examples identify the two sides separately.
How to interpret the result
The first payment is one period away. The discount rate must be positive, and a finite stream needs a different model.
Related calculations
Method and further reading
The example follows the FinMathly calculator method. For broader background, see Investor.gov: Introduction to investing. The background resource may use jurisdiction-specific terms; it does not replace the assumptions of this calculator.
Featured photograph: Pexels.