Perpetuity calculator
It answers: how much do I need today to pay this income every year without running out?
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How to use it
- Enter first yearly payment, annual discount rate, yearly payment growth and first payment.
- The result appears straight away and updates as you edit.
- Copy the result, or copy a link that keeps the same values to share it.
How it is calculated
PV = first payment / (discount rate − growth rate), with the first payment in one year. If the first payment is today, multiply by (1 + discount rate).
Example
Inputs: First yearly payment = 1,000 your currency, Annual discount rate = 5 %, Yearly payment growth = 0 %, First payment = In one year. Result: Present value: 20,000.00; First-year yield on the value: 5%.
Limits and caveats
- A theoretical model that assumes payments forever at fixed rates.
- Very sensitive when growth gets close to the discount rate.
Questions about this tool
Where are perpetuities used?
In valuing endowments, preferred shares and the Gordon growth model for stocks with steadily growing dividends.
Why must the discount rate exceed growth?
Otherwise distant payments do not shrink when discounted, so their sum is infinite.
How much do I need for 1000 a year forever?
At 5% with no growth you need 20000, the income divided by the rate.