Perpetuity Calculator

Written by Great Medico

Updated September 25, 2026 •2 min read

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Perpetuity Calculator is most useful when you want to see exactly how the entered assumptions drive the result. Changing one form value at a time makes the effect easier to follow.

What this calculator does

Perpetuity Calculator estimates the present value of a level or constantly growing stream of annual cash flows that is assumed to continue indefinitely. It works from next annual cash flow, required return / discount rate, and constant growth rate. For Perpetuity Calculator, the calculator does not pull live quotes or analyst estimates, which keeps the scenario reproducible with the numbers you supply.

How to use it

Start with Next annual cash flow, Required return / discount rate, and Constant growth rate. For Perpetuity Calculator, enter percentage or rate fields on the scale displayed by the form rather than converting them to an unstated format. Use one currency for all monetary fields in Perpetuity Calculator; the currency selector formats the result and does not convert exchange rates. Before calculating, recheck Next annual cash flow, Required return / discount rate, Constant growth rate against the source numbers you intend to analyze.

How the calculation works

For a growing perpetuity, value = next annual cash flow ÷ (discount rate − growth rate). A zero growth rate reduces the formula to cash flow ÷ discount rate. Perpetuity Calculator substitutes the relevant form values into this equation without adding an unstated market assumption. For Perpetuity Calculator, an unusual result is a reason to verify the entered values and the formula shown here before drawing a conclusion.

Example

A next-year cash flow of $5,000, required return of 8%, and constant growth of 2% gives a modeled perpetuity value of about $83,333. Use the same Perpetuity Calculator steps with your own form values rather than treating the sample as a target.

How to interpret the result

The value increases when the cash flow or growth assumption rises and falls when the required return rises. The discount rate must remain above the perpetual growth rate for the model to be mathematically meaningful. The Perpetuity Calculator result is most informative when the source values and period basis behind the displayed inputs are documented consistently.

Limitations and notes

Perpetuities are highly sensitive to the small difference between discount and growth rates. Real cash flows rarely grow forever at one constant rate, so this is best used as a simplified valuation component rather than a stand-alone market price forecast. Use Perpetuity Calculator as a transparent scenario calculation and review any real-world factors that the displayed fields do not capture.