Growing Perpetuity Calculator

Growing Perpetuity Calculator calculator can be used to determine the present value of a stream of cash flows that grow at a constant rate indefinitely.

Input Parameters

Calculation Results

Calculation Formula

PV = C / (r - g)

Where:
PV = Present Value of Growing Perpetuity
C = Initial Cash Flow
r = Discount Rate
g = Growth Rate

Result

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Growing Perpetuity Calculator Calculator Usage Guide

Learn how to use the Growing Perpetuity Calculator calculator and its working principles

How to Use the Calculator

  1. Enter the initial cash flow (C) - the amount of cash expected to be received in the first period.
  2. Enter the growth rate (g) - the constant rate at which the cash flow is expected to grow each period.
  3. Enter the discount rate (r) - the rate used to discount future cash flows to their present value.
  4. Click the "Calculate" button to compute the present value of the growing perpetuity.

Understanding the Formula

The present value of a growing perpetuity is calculated using the formula:

PV = C / (r - g)

Where:

  • PV = Present Value of Growing Perpetuity
  • C = Initial Cash Flow
  • r = Discount Rate
  • g = Growth Rate

Note: The discount rate must be greater than the growth rate for this formula to be valid.