Perpetuity Value Calculator
Present value of infinite income stream.
Calculate the present value of a perpetuity — infinite annual cash flow at a discount rate. Free educational calculator with the math explained step by step.
What this tool does
Enter annual cash flow and discount rate. The tool shows present value of perpetual stream.
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.
10,000 annual income at 5% discount rate: 200,000 present value as perpetuity. Consols, preferred stock, and trust income approximate perpetuities. At higher discount rates, perpetuity values drop sharply: 10% rate drops to 100,000.
Run it with sensible defaults
Using annual cash flow of 10,000, discount rate of 5%, the calculation works out to 200,000.00. Nudge the inputs toward your own situation and the output recalculates instantly. The defaults are meant as a starting point, not a recommendation.
The levers in this calculation
The inputs — Annual Cash Flow and Discount Rate — do not pull with equal force. 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.
How the math works
Standard perpetuity formula. The working is transparent — you can verify every step yourself in the formula section below. No black box, no opaque "proprietary model".
Where this fits in planning
This is a "what-if" tool, not a forecast. Use it to test ideas before committing: what happens if the rate is 2% lower than hoped, what happens if you add five more years. The value is in the scenarios you run, not the single answer you get from the defaults.
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.
Related calculations worth running
Plans get firmer when you triangulate. Alongside this one, the gordon growth model calculator, the annuity present value calculator, and the growing perpetuity calculator tend to come up in the same conversations. Running two or three together exposes inconsistencies in any single assumption — which is usually where the useful insight lives.
Perpetuity value 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
Standard perpetuity formula.
References
Frequently Asked Questions
Real examples?
Growing perpetuity?
Terminal value use?
Why rate matters?
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