Processing math: 100%

Growing Perpetuity Calculator

Calculate Present Value of Growing Perpetuity





Formula

The formula to calculate the present value of a growing perpetuity is:

PV=Drg

Where:

What is a Growing Perpetuity?

A growing perpetuity is a series of periodic payments that grow at a proportionate rate and continue indefinitely. It is a type of perpetuity, which is an infinite series of payments. The concept is often used in finance to determine the present value of a company’s cash flows, dividends, or other financial metrics that are expected to grow at a constant rate over an indefinite period. The formula for calculating the present value of a growing perpetuity takes into account the initial payment, the growth rate, and the discount rate.

Example Calculation 1

Let's assume the following values:

Using the formula:

PV=1000.080.03=1000.05=2000

The Present Value of the Growing Perpetuity is $2000.

Example Calculation 2

Let's assume the following values:

Using the formula:

PV=1500.100.04=1500.06=2500

The Present Value of the Growing Perpetuity is $2500.