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The Perpetuity Calculator helps investors determine the present value of an infinite series of future cash flows. It is a vital tool for valuing assets like preferred stocks or real estate investments that provide ongoing payments indefinitely.
A perpetuity calculator determines the present value of an infinite stream of equal cash flows, using a fixed discount rate to account for the time value of money.
A perpetuity is a financial instrument that pays a fixed amount indefinitely, with no end date.
The present value of a perpetuity is calculated by dividing the annual payment by the discount rate.
Perpetuities are commonly used to value preferred stocks, real estate, and certain endowment funds.
The formula assumes a constant discount rate and equal periodic payments over time.
PV = C / (r - g), where PV is the present value, C is the cash flow for the next period, r is the discount rate, and g is the growth rate of the cash flow.
This formula divides the annual payment by the difference between the required rate of return and the constant growth rate to determine what that perpetual income stream is worth in today's dollars.
Investors frequently use this tool when evaluating high-dividend stocks or perpetual bonds that have no maturity date. It allows financial planners to determine if the price of an asset is justified by the future income it will generate forever. By inputting different growth rates, investors can perform sensitivity analysis to see how changing market conditions impact the fair value of their long-term holdings. It serves as a cornerstone for valuation models, ensuring that investors do not overpay for assets that promise infinite returns.
If an investment pays $1,000 annually with a growth rate of 2% and you require a discount rate of 7%, the present value is $20,000. This calculation shows that you should not pay more than $20,000 today to receive that perpetual stream of growing payments.
These authoritative sources inform our calculator methodology and ensure accuracy.
Written by Qasem Mohammed
Financial tools developer and founder of QFINHUB. All calculators are built with industry-standard formulas and reviewed for accuracy. Content is for educational purposes only — always consult a qualified financial professional for decisions about your specific situation.
Last updated: June 25, 2026 ·About QFINHUB · Editorial Policy
Last reviewed by Qasem Mohammed — June 25, 2026
AI & Software Engineer, Founder & Lead Developer at QFINHUB · Editorial Policy
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Present Value
$20,000.00
At 5% discount rate
Type
Constant Perpetuity
Annual Payment
$1,000.00