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Perpetuity Value Calculator

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Source: OpenStax, Principles of Finance 2e, 8.1 Perpetuities — https://openstax.org/books/principles-finance-2e/pages/8-1-perpetuities

A QUICK WALKTHROUGH

How to use this tool

  1. Enter the cash flow and positive discount rate.
  2. Choose fixed or growing perpetuity; enter growth for growing cash flows.
  3. Calculate and review the value.

Perpetuity type

Fixed: V = C ÷ r. Growing: V = C₁ ÷ (r − g), requiring r > g.

Formula

This idealized model assumes an infinite stream of cash flows. It is arithmetic only and provides no prediction or financial advice.

GOOD TO KNOW

Common questions

When can I use the growing formula?

Use it only when the discount rate is greater than the growth rate; this tool does not assess whether those assumptions are realistic.