Perpetuity Calculator
Solve for perpetuity present value, payment, or discount rate using the standard level-perpetuity formula. Useful for valuation, preferred stock analysis, and long-run cash flow estimates.
Choose which perpetuity value you want to solve for.
Cash flow paid every period for a level perpetuity.
Current value of the perpetual payment stream.
Rate must be greater than zero for a standard perpetuity.
Payment = Present Value x Discount Rate
Discount Rate = Payment / Present Value
What is a perpetuity?
A perpetuity is a stream of equal cash flows that continues indefinitely. In practice, the formula is used to value very long-lasting cash flows, preferred stock, and simplified terminal values in valuation models.
What is the perpetuity formula?
For a level perpetuity, present value equals payment divided by the discount rate. Rearranging that relationship lets you solve for payment or discount rate when the other two values are known.
When is a perpetuity model appropriate?
It works best when cash flows are expected to remain stable for a very long time and when the discount rate is positive. It is less suitable when cash flows are seasonal, shrinking rapidly, or expected to end on a known date.
How is perpetuity different from an annuity?
An annuity has a fixed number of payments. A perpetuity assumes the payments never stop. Because of that, perpetuity calculations are simpler, but they rely more heavily on the discount rate assumption.
🔗 Related Calculators
📐 Formula
Payment = Present Value x Discount Rate
Discount Rate = Payment / Present Value