Present Value of a Perpetuity Calculator
Payment =
Interest Rate =
Growth Rate = 0
Present Value =
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Calculates the present value of cash flows in perpetuity. There are two alternatives allowed:
- fixed amount every year
- amount changes by fixed percent
Rows
- Payment: periodic payment, dividend or coupon amount
- Interest Rate: interest rate expressed as a percentage
- Growth Rate: percentage by which the payment grows (by a fixed amount)
- Present Value: present value of the perpetuity
Description and examples are provided by [http://www.financeformulas.net/Present_Value_of_Growing_Perpetuity.html | financeformulas.net].
Submitted by Pawel Wydymus and William Davis.
Examples
Example 1
What's the present value of a $100 payment made at a 5% interest rate that increases 3% each period?
- Payment: 100
- Interest Rate: 5%
- Growth Rate: 3%
The present value is $5,000.
Example 2
What's the present value of a $100 payment made at a 3% interest rate with no payment increase?
- Payment: 100
- Interest Rate: 3%
- Growth Rate: 0%
The present value is $3,3333.33.
Keywords
Payment
Interest Rate
Growth Rate
Present Value
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