Difference between revisions of "Perpetuity"

From knowledgebase
Jump to navigation Jump to search
 
Line 1: Line 1:
−
Perpetuity
+
A perpetuity is a constant stream of identical cash flows with no end.  The formula for determining the [[Present Value|Present Value]] of a perpetuity is as follows:
 +
 
 +
<math>PV</math> <math>=</math> <math>\frac{C_1}{(1+r)^1} +  \frac{C_2}{(1+r)^2} +  \frac{C_3}{(1+r)^3} + ... = \frac {C}{r}</math>
 +
 
 +
Source: http://www.investopedia.com/terms/p/perpetuity.asp
 +
 
 +
In [[Principles of Corporate Finance|Principles of Corporate Finance]] the perpetuity is defined as an [[Annuity|Annuity]] in which the periodic payments begin on a fixed date and continue indefinitely.
 
[[Category:finance]]
 
[[Category:finance]]
  

Latest revision as of 19:25, 27 August 2020

A perpetuity is a constant stream of identical cash flows with no end. The formula for determining the Present Value of a perpetuity is as follows:

Source: http://www.investopedia.com/terms/p/perpetuity.asp

In Principles of Corporate Finance the perpetuity is defined as an Annuity in which the periodic payments begin on a fixed date and continue indefinitely.