Perpetuity Calculator
Divide a perpetual payment by the discount rate to find the present value of a perpetuity, an income stream that pays the same amount forever.
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Enter the payment and discount rate to see the present value.
Worked example
With these example inputs:
- Payment per period$5,000
- Discount rate4%
Present value: $125,000
- Payment$5,000
- If the rate were 1 point lower$166,667
- If the rate were 1 point higher$100,000
Frequently asked questions
What is a perpetuity?
A perpetuity pays a fixed amount every period forever. Its present value is simply the payment divided by the discount rate, so $5,000 a year at 4% is worth $125,000.
Do perpetuities exist in practice?
True perpetuities are rare, but the idea models things like certain preferred shares or consols. It is also a building block for valuing long-lived income streams.