Growing Perpetuity Calculator
Perpetuity value with growing cash flows.
Calculate present value of a growing perpetuity using the Gordon formula. Enter first year cash flow and growth rate for an instant result.
What this tool does
Enter first cash flow, growth rate, and discount rate. The tool shows present value.
Enter Values
Formula Used
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Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
5,000 first-year cash flow growing 3% annually, 8% discount: PV = 5,000 / (0.08 - 0.03) = 100,000. Formula requires growth below discount rate. Used in Gordon dividend model and DCF terminal values.
Quick example
With first year cash flow of 5,000 and growth rate of 3% (plus discount rate of 8%), the result is 100,000.00. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.
Which inputs matter most
You enter First Year Cash Flow, Growth Rate, and Discount Rate. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.
What's happening under the hood
Gordon growing perpetuity formula. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.
Why investors run this
Most people's intuition for compounding is wrong — not because the math is hard, but because linear thinking doesn't account for curves. Running numbers through a calculator like this one is the cheapest way to recalibrate that intuition before making an irreversible decision about contribution rate, asset mix, or retirement age.
What this doesn't capture
Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. Treat the number as one scenario, not a forecast.
Where to go next
This calculation rarely sits alone in a planning exercise. If you're running these numbers, you'll probably also want the perpetuity value calculator, the gordon growth model calculator, and the asset growth projection calculator — each one answers a different question in the same territory. Treating them as a set rather than in isolation usually produces a more honest picture.
Growing perpetuity produces a present value based on the inputs provided.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
Gordon growing perpetuity formula.
References
Frequently Asked Questions
Growth must be below discount?
Dividend stock use?
Long-term growth cap?
Terminal value sensitivity?
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